Commonhold and Leasehold Reform Act 2002

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