Leasehold flats to be banned in overhaul of centuries-old system

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The centuries-old leasehold system in England and Wales will be abolished before the next general election, the housing minister has promised.

The sale of new leasehold flats will be banned under government plans to make commonhold the default tenure, handing homeowners greater control over their properties.

After years of complaints from leaseholders about crippling costs and deteriorating buildings, housing minister Matthew Pennycook vowed an end to the “feudal” system.

He said homeowners have been subject to “unfair practices and unreasonable costs” for too long, with measures set out in a commonhold white paper on Monday marking the “beginning of the end” for the system.

Under the current system, third-party landlords can own a building’s lease and therefore make decisions on behalf of homeowners.

The government has proposed bringing the leasehold system to an end, as promised in Labour’s manifesto, giving homeowners more control over how their buildings are run.

Homeowners will not have to pay extra costs such as ground rent under the proposed reforms.

The white paper states commonhold will be “reinvigorated” through a new legal framework and the sale of new leasehold flats will be prohibited.

Mr 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 21st century."

The government has also said it is “determined” to make the conversion to commonhold easier for existing leaseholders.

Mr Pennycook added: “At the heart of the commonhold model is a simple principle: the people who should own buildings, and who should exercise control over their management, shared facilities and related costs, are not third-party landlords but the people who live in flats within them and have a direct stake in their upkeep.”

The British Property Federation welcomed the changes but warned the government to “tread carefully” with its reforms.

Policy director Ian Fletcher said large mixed-used buildings are complex to maintain and manage, calling for training in doing so for owners under the new system.

He also called for a clear process for transitioning from leasehold to commonhold and raised questions about how many people would volunteer to manage their buildings.

Finally, he added: “This is not about rhetoric around feudalism but fundamentally about how best to own property and manage communal living areas. That may be commonhold – and there is no reason it should not work in the UK – but before we take that leap, we should be weighing up the pros and cons.”

A draft leasehold and commonhold reform bill, which will include the details of how reformed commonhold will work, will be published later this year, the Ministry of Housing, Communities and Local Government has said.

Legislation will apply to England and Wales, where there are around five million leasehold homes.