The Government has outlined proposals to abolish the leasehold system in England and Wales, banning the sale of new leasehold flats as part of a wider effort to give homeowners greater control over their properties.
The planned reforms, published in a white paper on Monday, aim to replace leasehold with commonhold, a system used in many other countries where homeowners collectively own and manage the buildings they live in. The changes will affect around five million leasehold homes across England and Wales.
Housing minister Matthew Pennycook said: “This Government promised not only to provide immediate relief to leaseholders suffering now but to do what is necessary to bring the feudal leasehold system to an end – and that is precisely what we are doing.
“By taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners, not third-party landlords, who will own the buildings they live in and have a greater say in how their home is managed and the bills they pay.
“These reforms mark the beginning of the end for a system that has seen millions of homeowners subject to unfair practices and unreasonable costs at the hands of their landlords, and build on our Plan for Change commitments to drive up living standards and create a housing system fit for the twenty-first century.”
Under the leasehold system, freeholders own the building while leaseholders purchase the right to occupy their flats for a fixed period, often facing service charges, ground rents, and restrictions on making changes to their homes. Critics argue the system is outdated and heavily weighted in favour of freeholders.
However, freeholders have defended leasehold arrangements, arguing they are “the most effective way of managing large complex apartment buildings.”
The Government has pledged to “reinvigorate” commonhold by introducing a new legal framework, with a draft Leasehold and Commonhold Reform Bill expected to be published later this year. The bill will outline how the new system will work in practice.
While leasehold reforms have been long promised, this latest move marks a significant step towards overhauling property ownership laws in England and Wales.
Natalie Chambers, director of the Residential Freehold Association (RFA), said: “We welcome any measure that improves consumer choice, but this should not be seen as a trade-off between leasehold and commonhold. As the Government’s own data shows, millions of leaseholders across the country are perfectly content with the tenure and we firmly believe that leasehold is the most effective way of managing large complex apartment buildings.
“In the absence of the leasehold system, residents would face greater financial and legal responsibilities for block maintenance and management – which the previous government’s own research suggests a majority of leaseholders are unlikely to be in favour of.
“The RFA has long called for responsible and proportionate reform of the leasehold sector, which is the most effective way of helping leaseholders and providing more good quality affordable and professionally managed housing. This includes introducing mandatory regulation of managing agents, as recommended by Lord Best in 2019, which will drive up standards for homeowners.”
