Last amended by Act of Senedd Cymru (2026 asc 5) in 2026. Welsh legislation of 2026 makes further prospective amendments affecting the Act's operation in Wales (recorded as outstanding effects on legislation.gov.uk, e.g. insertions into ss.14, 26, 38A and 69).
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The Commonhold and Leasehold Reform Act 2002 made two major reforms to flat and leasehold ownership in England & Wales. Part 1 created commonhold — a form of freehold ownership of individual units within a development, managed by a commonhold association under a commonhold community statement — intended as an alternative to residential leasehold, though very few commonholds have been created in practice. Part 2 reformed leasehold: Chapter 1 introduced the no-fault right to manage (RTM), letting qualifying leaseholders of flats take over management from the landlord through an RTM company without proving fault or paying compensation; other chapters relaxed collective enfranchisement and lease-extension qualifying rules; and Chapter 5 added significant leaseholder protections, including the requirement to serve a prescribed notice before ground rent is payable (s.166), a bar on forfeiture for small sums (s.167) and a bar on forfeiture proceedings before a breach has been determined by a tribunal (s.168), plus administration-charge controls in Schedule 11. The Act has since been substantially amended, and further amendments made by the Leasehold and Freehold Reform Act 2024 (and Welsh legislation of 2026) were still awaiting commencement as at August 2026.
Key Points
- Part 1 creates commonhold land: unit-holders own the freehold of their units, with common parts owned and managed by a commonhold association (a company limited by guarantee) under a commonhold community statement (ss.1–70)
- Commonhold association's duty to manage, and enforcement/compensation regime (ss.35, 37)
- Right to manage (RTM): qualifying tenants of flats may acquire the landlord's management functions through an RTM company as of right — no fault, no compensation (ss.71–113)
- RTM applies to self-contained buildings or parts with two-thirds of flats let to qualifying tenants on long leases (s.72)
- Claim exercised by notice (s.79); management functions under leases transfer to the RTM company (s.96); tenant covenant enforcement (s.100)
- Ground rent is not payable unless the landlord has served a prescribed demand notice giving 30–60 days (s.166)
- No forfeiture for small sums: forfeiture unavailable for amounts up to the prescribed sum (£350) unless outstanding for more than three years (s.167)
- No forfeiture notice under s.146 Law of Property Act 1925 for breach of covenant until the breach is admitted or finally determined by a tribunal or court (s.168)
- Schedule 11 regulates variable administration charges — payable only to the extent they are reasonable
- Part 2 also reduced qualifying thresholds for collective enfranchisement and removed the residence requirement for lease extensions
Amendments History
2004 — Commencement of Part 1
The commonhold provisions were brought into force on 27 September 2004. Take-up has been minimal — commonhold remains rare in practice, which drove later reform proposals.
2013 — Transfer of Tribunal Functions Order / Chapter 6A
Leasehold valuation tribunal functions transferred to the First-tier Tribunal (Property Chamber) in England (Chapter 6A inserted; references updated).
2024 — Leasehold and Freehold Reform Act 2024
Amended the 2002 Act, including raising the RTM non-residential limit from 25% to 50% (in force 3 March 2025). Many further amendments — including substitutions in s.167 and the omission of ss.121–124 and other provisions — remained not yet in force as at August 2026 (recorded by legislation.gov.uk as outstanding effects).
2026 — Act of Senedd Cymru (2026 asc 5)
Welsh legislation of 2026 makes further prospective amendments affecting the Act's operation in Wales (recorded as outstanding effects on legislation.gov.uk, e.g. insertions into ss.14, 26, 38A and 69).
Frequently asked questions
- What is commonhold and how does it differ from leasehold?
- Commonhold is a form of freehold ownership for individual units within a development. Unit-holders own the freehold of their specific units, while the common parts are owned and managed by a commonhold association. This association is a company limited by guarantee that operates under a commonhold community statement. Although intended as an alternative to residential leasehold, very few commonholds have been created in practice since the provisions came into force in 2004.
- How can flat owners take over the management of their building?
- Qualifying leaseholders of flats can take over management from the landlord through a Right to Manage (RTM) company. This is a no-fault right, meaning tenants do not need to prove the landlord is failing or pay compensation. The building or part must have at least two-thirds of flats let to qualifying tenants on long leases. The claim is exercised by serving a notice, after which management functions under the leases transfer to the RTM company.
- Can a landlord start forfeiture proceedings immediately after a lease breach?
- A landlord cannot serve a forfeiture notice for a breach of covenant until the breach has been admitted by the tenant or finally determined by a tribunal or court. This prevents landlords from initiating forfeiture proceedings immediately after an alleged breach. Furthermore, variable administration charges are regulated and are only payable to the extent that they are considered reasonable under the Act.
- Have there been recent changes to the Commonhold and Leasehold Reform Act 2002?
- The Leasehold and Freehold Reform Act 2024 amended the 2002 Act, including raising the RTM non-residential limit from 25% to 50%, which came into force on 3 March 2025. However, many further amendments, including changes to specific sections regarding forfeiture and other provisions, were still awaiting commencement as at August 2026. Welsh legislation from 2026 also makes further prospective amendments affecting the Act's operation in Wales.