Will Commonhold Conversion Be Voluntary or Compulsory in 2026? What Happens If You Keep Your Lease. This guide explains the proposed rules, costs, consent thresholds (now as low as 50%), and your options
Summary:- Provided the 50% majority vote passes, the freehold (the ‘reversion’) will be enfranchised (added) into the commonhold and the landlord compensated in accordance with the act. The tenants that voted for commonhold will convert their lease units to commonhold units. The Tenants under the old leases (non-consenting leaseholders or ‘NCLs’ who voted to keep their old leases) will remain occupying their units until they sell, at which time they will need to convert to commonhold in order to sell, or instead of applying to extend their lease i.e. if they intend to mortgage it to a bank.
Practical Impact on Costs or NCLs
- Higher effective cost later: NCLs may face a higher total outlay when selling (or converting) compared to participating initially. This includes:
- The exact valuation formula and cost-sharing mechanics will be set out in more government regulations made under these clauses – 50, 52, 122 onwards – (subject to parliamentary procedures). The intent is ‘fairness’ and to encourage initial participation. No detailed regulations or specific formula have been published yet
Table of Contents
Introduction
Commonhold provides freehold-style ownership of flats without a landlord, ground rent, or lease expiry date. The Draft Commonhold and Leasehold Reform Bill 2026 seeks to make commonhold the default for new flats and significantly easier for existing leasehold blocks to convert.
Leaseholders frequently ask: Will conversion to commonhold be voluntary or compulsory? What are the consequences of keeping your lease if the majority converts? And how will compensation and marriage value work in light of ongoing legal challenges?
This guide explains the current position as of June 2026.
Ask your own leasehold query
Is Conversion to Commonhold Voluntary or Compulsory?
For existing leasehold buildings: Conversion remains voluntary.
The Government has confirmed it will not introduce compulsory conversion for existing properties, citing legal, practical, and financial complexities.
Key reforms in the Draft Bill include:
- Lowering the consent threshold from 100% unanimous agreement to 50% of qualifying leaseholders.
- Linking conversion to collective enfranchisement (buying the freehold).
- Retaining requirements for freeholder and lender consents in most cases.
For new-build flats: Commonhold is expected to become the default tenure once the ban on new long leaseholds takes effect (likely 2028–2029).
How the Conversion Process Works
If at least 50% of qualifying leaseholders support conversion:
- The group usually purchases the freehold through collective enfranchisement.
- The building is registered as commonhold.
- Non-consenting leaseholders’ leases are modified to align with the Commonhold Community Statement (CCS). They become members of the commonhold association with voting rights.
What Happens If You Keep Your Lease? Consequences of Staying Leasehold
You are not forced to convert immediately. Your lease continues, but the system is designed to gradually phase out residual leaseholds.
Short-term consequences:
- Your lease remains valid.
- You must contribute to shared building costs through the modified lease.
- You gain membership and voting rights in the commonhold association.
Longer-term consequences:
- The building may operate as a mixed-tenure block (commonhold + remaining leasehold units), which can create management challenges.
- Trigger events are likely to apply: when you sell your flat or seek to extend your lease, you may be required or strongly incentivised to convert your unit to commonhold.
- Potential impact on property value and saleability — fully commonhold flats may become more attractive to buyers and mortgage lenders over time.
Uncertainty Around Compensation and Marriage Value (ARC Freeholders Appeal)
A major source of ongoing uncertainty is the ARC Time Freehold Income Authorised Fund appeal (also known as the ARC Freeholders Human Rights challenge).
In October 2025, the High Court dismissed a judicial review brought by major freehold owners (including ARC, Cadogan, Grosvenor and others). They argued that abolishing marriage value, capping ground rents in valuations, and removing landlords’ non-litigation costs under the Leasehold and Freehold Reform Act 2024 breached their human rights (Article 1 Protocol 1).
The Court of Appeal granted permission to appeal in April 2026. The full appeal hearing is expected in late 2026 or early 2027.
Why this creates uncertainty for compensation:
- Until the appeal is decided, there remains doubt about the final rules for calculating premiums in enfranchisement and commonhold conversions.
- Even though marriage value has technically been abolished, the outcome of the appeal could influence how “fair compensation” is calculated for freeholders — especially for non-consenting leaseholders converting later.
- This legal limbo may delay full implementation of the new valuation rules and affect negotiations in collective enfranchisement and commonhold conversions.
Leaseholders considering action should obtain specialist advice, as the final framework may differ depending on the Court of Appeal’s decision.
Will You Pay More If You Convert Later?
Yes — there is a strong risk of higher costs.
If you stay out of the initial collective process and convert later, anti-avoidance rules are expected to require you to pay your fair share of the original collective costs, communal/development value, and fees. This is likely to make individual conversion more expensive than joining early. You will probably pay this compensation to the commonhold association rather than the original freeholder.
Traditional 50% marriage value no longer applies, but the exact replacement valuation method remains subject to the ARC appeal outcome and future regulations.
Pros and Cons of Converting vs Staying Leasehold
Advantages of converting early:
- Full ownership with no ground rent or expiry date.
- Shared costs and stronger long-term value.
- Greater control over management.
Risks of staying leasehold longer:
- Higher potential costs on later conversion.
- Reduced market appeal in a predominantly commonhold building.
- Ongoing obligations under modified lease terms.
Costs Involved in Conversion
Expect legal fees, valuation costs, and the premium for the freehold interest. Collective conversion spreads these costs. Late individual conversion is likely to be more expensive. The Government hopes the 50% threshold will reduce barriers, but significant investment is still required.
What Should You Do Now?
- Check your lease terms (remaining length, ground rent, etc.).
- Discuss options with other leaseholders in your block.
- Seek advice from a solicitor and valuer experienced in leasehold reform.
- Monitor developments on the Draft Bill and the ARC appeal.
Conclusion
Conversion to commonhold for existing leaseholders will stay voluntary. The lowered 50% consent threshold makes it more achievable, but there is no compulsion.
If the majority converts, you can keep your lease for now. However, you may face mixed-tenure issues, future trigger points requiring conversion, and potentially higher compensation costs when you do convert. The ongoing ARC Freeholders Human Rights appeal adds uncertainty to valuation and compensation rules, so professional advice is essential before making decisions.
The direction of travel is clearly towards commonhold as the preferred form of flat ownership. Understanding your position in 2026 will help you make informed choices.
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Basics of calculating freeholder compensation and marriage value
Human Rights Act challenge to leasehold reforms
The Commonhold and Leasehold Reform Bill
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