Government announces end of leasehold system in England and Wales

The longstanding leasehold system in England and Wales will be abolished before the next general election, according to a promise made by the housing minister. The government plans to introduce reforms that will make commonhold the default ownership structure, offering homeowners greater control over their properties.

The current leasehold system has faced criticism for imposing high costs and poor living conditions on homeowners. In response to these ongoing complaints, Housing Minister Matthew Pennycook confirmed that the “feudal” leasehold system will come to an end. He acknowledged that leaseholders have suffered from “unfair practices and unreasonable costs” for far too long. The proposed reforms, outlined in a white paper on commonhold, mark the beginning of the end for the leasehold system.

Under the current leasehold arrangement, third party landlords often own the lease to a property, meaning they have significant control over decisions that affect homeowners. The government has pledged to eliminate this system and empower homeowners to take charge of how their buildings are managed. The new plans will also eliminate extra costs, such as ground rent, for homeowners.

The white paper outlines how commonhold will be revitalised through a new legal framework, with a complete ban on the sale of new leasehold flats. Minister Pennycook emphasised that this move fulfils the government’s promise to offer immediate relief to current leaseholders and to permanently end the leasehold system. The reforms aim to ensure that homeowners, not third-party landlords, own and manage the buildings they live in, allowing them to have a greater influence over how their homes are run and the costs they incur.

Pennycook further explained that the heart of the commonhold model is to ensure that those living in flats, who directly benefit from maintaining the building, also take on the responsibility of its management.

While the British Property Federation expressed support for the changes, it also urged caution. It raised concerns about the complexity of managing mixed-use buildings and stressed the importance of providing training for owners under the new system. It also questioned the process for transitioning from leasehold to commonhold and whether enough people would volunteer to take on building management roles. It called for a careful consideration of the pros and cons of commonhold before implementing such widespread changes.

The Ministry of Housing, Communities and Local Government has announced that a draft bill detailing the changes will be published later this year. The legislation, which will apply to England and Wales, affects the five million leasehold homes.

For further advice and information about how change this could affect you, please contact B P Collins’ property team at enquiries@bpcollins.co.uk or call 01753 889995.