Millions of homeowners in England and Wales set for property rights shake-up as government moves to scrap leasehold flats

The government has set its sights on abolishing the sale of new leasehold flats in England and Wales, aiming to transition to a commonhold system.

Housing Minister Matthew Pennycook called leasehold arrangements “feudal” and emphasized the need for reform.

While leasehold has been the standard ownership model for flats, commonhold is already widely used in Scotland and other countries.

Understanding Leasehold and Its Issues

Leasehold ownership means that while buyers purchase the right to live in a property for a set number of years—often 120 years or more—the land and building itself remain under the control of a freeholder.

In addition to buying the lease, leaseholders must pay service charges to cover maintenance of shared spaces and sometimes a separate ground rent.

This structure has been heavily criticized in recent years due to escalating fees, hidden costs, and lack of transparency.

In 2024, leasehold service charges hit record highs, fueling frustration among homeowners.

Ground rent, which has also been a point of contention, is set to be banned under the proposed reforms.

The Commonhold Alternative

Under the commonhold model, individual flat owners would hold the freehold to their property while collectively managing shared spaces.

This approach gives homeowners direct control over their buildings and maintenance costs, eliminating reliance on third-party landlords.

The Ministry for Housing, Communities and Local Government has confirmed that commonhold will be strengthened through a new legal framework.

The sale of new leasehold flats will be outlawed, aligning with Labour’s election promise to phase out the system.

What About Existing Leaseholders?

A major question remains: what happens to those who already own a leasehold property?

While new flats will shift to commonhold, millions of current leaseholders are still tied to their contracts.

Matthew Pennycook reassured that the government is committed to providing relief to those stuck in the system.

He emphasized that the ultimate goal is to shift control from landlords to homeowners, giving them more say in property management and costs.

However, transitioning existing leaseholders to commonhold poses challenges.

Freeholders—who benefit financially from lease extensions and ground rents—would need to relinquish their ownership stakes.

Campaigners Push for Further Reforms

Leasehold reform advocates argue that addressing future abuses is not enough.

Katie Kendrick, founder of the National Leasehold Campaign, stressed the importance of offering solutions to those already trapped in the system.

She highlighted the need for a clear process to convert leasehold properties to commonhold, alongside reforms to managing agent regulations and enfranchisement valuation.

What Happens Next?

The government has vowed to make commonhold conversion easier, though the specifics remain unclear.

A draft Leasehold and Commonhold Reform Bill is expected to be published later this year, outlining the legal details of the transition.

While these reforms mark a significant step toward homeowner empowerment, their success will depend on how effectively they address the complexities of existing leasehold agreements.