The leasehold property system is set to be dismantled as the government announces plans to ban the sale of new leasehold flats before the next election.
A comprehensive white paper released Monday outlines the Labour government's strategy to make commonhold the default tenure for flat purchases in England and Wales, fulfilling a key manifesto promise.
What's Changing?
The leasehold system—dating back to medieval times—currently allows freeholder landlords to own a building's lease while tenants purchase only the right to live in their homes for a specified period. Under the proposed commonhold arrangement, homeowners will instead own a share of their building, granting them greater control over management decisions.
Many current leaseholders have reported feeling like "cash cows," with no influence over repair and maintenance costs for their buildings. They also face ground rent charges—essentially fees for occupying land that isn't theirs—with contracts often allowing landlords to increase these payments without providing additional services.
The New Framework
The white paper introduces plans to "reinvigorate" commonhold through a new legal framework that will:
- Ban the sale of leasehold flats
- Give flat buyers an ownership stake in their buildings "from day one"
- Eliminate ground rent payments
- Provide residents with control over building management
These proposals will form the basis of the draft Leasehold and Commonhold Reform Bill, scheduled for publication in the second half of this year.
Mixed Reactions
Katie Kendrick, co-founder of the National Leasehold Campaign (NLC), called the announcement a "welcome step in the right direction" after years of unfulfilled promises on leasehold reform. However, she urged the government not to "leave existing leaseholders behind" and to implement reforms from the previous government's Leasehold and Freehold Reform Act (LFRA).
The LFRA narrowly passed before the July election after being modified by former housing secretary Michael Gove. Labour has since described the legislation as "half-baked," leading to delays in implementing several measures, including the abolishment of 'marriage value'—an additional premium paid to landlords for lease extensions when they fall below 80 years.
Existing Leaseholders Still Face Challenges
For leaseholders like Melissa Harker, who received a £15,000 quote to extend her lease, the current situation remains problematic. "I don't have it but I don't see what I am paying for except a piece of paper," she told Sky News. "Because my lease is so low I can't sell, I can't remortgage, I am in negative equity."
While welcoming the ban on new leasehold flats, Harker emphasized: "I am pleased new flats won't be leasehold for people moving forward but there's so many people stuck with this nightmare."
There are approximately five million leasehold properties in England and Wales, predominantly flats. The government plans to consult on valuation rates for lease extension calculations in summer 2025 and has expressed determination to facilitate conversion to commonhold for existing leaseholders.
Housing Minister Matthew Pennycook stated: "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."
