Labour has claimed new plans being unveiled today would spell the “beginning of the end for Britain’s feudal leasehold system”.
Proposals published in a white paper will seek to end a form of property ownership known as leasehold; currently leaseholders do not own their property outright and are forced to pay potentially sky-high ground rents and exorbitant admin fees to a landlord.
The government said it would be rolling out more support for commonhold, which allows homeowners more power, control and security over their homes by enabling them to buy a share of their property.
There are nearly 5 million leasehold properties in England – some 19% of the housing stock, according to the Office for National Statistics.
Last autumn, the government was criticised for delaying The Leasehold and Freehold Reform Act 2024, which had been on the verge of implementation during the Conservative Party’s final days in power.
Labour said it would be publishing a Leasehold and Commonhold Reform Bill later this year which would set out the legal framework for how reformed commonhold will work.
Matthew Pennycook, housing and planning minister, said: “Change will ensure flat owners are not second-class homeowners and that the unfair feudal leasehold system is brought to an end, building on the plan for change ambition to drive up living standards.”
“Homeowners will have a stake in the ownership of their buildings from day one, not have to pay ground rent, and will gain control over how their buildings are run under major plans to bring the feudal leasehold system to an end.”
Mr Penncook said commonhold-type models were used successfully all over the world, adding: “It can and does work and the government is determined, through both new commonhold developments and by making conversion to commonhold easier, to see it take root – so millions of existing leaseholders can also benefit from this step change in rights and security.”
He said the government had already empowered leaseholders with more rights and security – enabling them to buy their freehold or extend their lease without having to wait two years from the point they purchased their property, and overhauling the right to manage – putting more leaseholders in the driving seat of the management of their property and service charges.
“Progress will be made as quickly as possible to make it cheaper and easier for leaseholders to buy their freehold or extend their lease, and to make it easier for leaseholders to challenge unreasonable service charge increases.”
Changes set out in the Commonhold White Paper include:
- New rules that will enable commonhold to work for all types of developments, including mixed-use buildings and allowing shared ownership homes within a commonhold.
- Greater flexibility over development rights, helping developers build with confidence and maintaining safeguards for the consumer.
- Giving mortgage lenders greater assurance with new measures to protect their stake in buildings and protect the solvency of commonholds – such as mandatory public liability insurance and reserve funds and greater oversight by commonhold unit owners to keep costs affordable.
- Strengthening the management of commonholds, with new rules around appointing directors, clear standards for repairs, and mandating use of reserve funds; and
- Providing an enhanced offer for homeowners – including requiring greater opportunities for democracy in agreeing the annual budget, clarifying how owners may change “local rules” over how a building is run and new protections for when things go wrong.