The Government has announced sweeping changes to homeownership, taking a step toward banning new leaseholds in England and Wales.
The move, aimed at replacing the controversial system with commonhold ownership, promises to give homeowners greater control over their properties while addressing mounting complaints over spiraling service charges.
These reforms could transform the way people manage and buy their homes by bringing flat ownership in line with buying a freehold house.
What is a leasehold and why is it so controversial?
Under the leasehold system, homeowners do not own their property outright.
Instead, they purchase the right to live in a flat for a fixed period, often decades or even centuries, while the building itself remains owned by a freeholder. Leaseholders must pay service charges, ground rent and other fees dictated by the freeholder, often with little transparency or control over rising costs.
Critics argue that leasehold creates an unfair power imbalance. Freeholders and their managing agents control essential maintenance and repairs, yet leaseholders are forced to pay for them – sometimes at inflated prices.
Disputes over unexpected charges, poor maintenance, and difficulties in selling leasehold properties have made the system increasingly unpopular.
The government’s proposed shift to commonhold would put an end to this model, allowing flat owners to co-own their buildings and directly manage costs and maintenance decisions.
Government’s grand plan: A future without leaseholds
Housing Minister Matthew Pennycook has called the current leasehold system “inherently unfair,” stating that the Government’s new reforms will put power back in homeowners’ hands.
Under commonhold, residents will co-own their building and control costs – deciding on maintenance budgets and appointing managing agents without interference from freeholders.
While the ban on new leasehold flats is a clear step forward, the government is still working on a solution for millions of existing leaseholders. Ministers are promising an “easy” pathway for leaseholders to convert to commonhold, but details remain unclear.
The upcoming Leasehold and Commonhold Reform Bill, set to be published later this year, will lay out the transition framework.
Will commonhold deliver real change?
Despite optimism, critics warn that the transition to commonhold could create new financial and legal burdens for homeowners, especially in larger developments.
Some industry experts argue that leasehold is still the most efficient way to manage complex buildings, while others worry that mortgage lenders may be hesitant to embrace the new model.
The National Leasehold Campaign (NLC) has welcomed the reforms but insists that existing leaseholders must not be forgotten. “We need a clear and fair mechanism for conversion,” said NLC founder Katie Kendrick. “People trapped in the leasehold system deserve an escape route.”
With millions of homeowners desperate for change, the success of this ambitious overhaul will depend on how smoothly the government can deliver its vision. For now, the leasehold system remains intact – but its days could be numbered.
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