The Housing, Communities and Local Government (HCLG) Committee report on the government’s draft Commonhold and Leasehold Reform Bill said the proposed legislation was a “significant step” towards giving leasehold homeowners more control of their buildings, but more needed to be done.
Give leaseholders more protections sooner
The Housing Committee suggested bringing the proposed ground rent cap of £250 into force by the end of next year to accelerate the timeline and questioned why the transition to zero ground rent was 40 years, rather than 20 years.
The committee asked whether a shorter transitional period would not equally represent a fair balance between leaseholders, freeholders and institutional investors.
It also recommended the independent regulation of property management agents, saying they had “delivered appalling standards of service without consequence” for too long.
What mortgage and protection advisers should take from the FCA’s AI stance
Sponsored by Sesame Bankhall Group
Further, it said recommendations made by the Law Commission to strengthen leaseholders’ rights had not been included in the draft bill, despite the government pledging to enact them. It said these measures would make it “easier and more affordable” for existing leaseholders to convert to commonhold.
Making sure commonhold works
The report said that since the legal framework for commonhold tenure was introduced in England and Wales through the Commonhold and Leasehold Reform Act 2002, there had not been “significant uptake”, with just 18 commonhold blocks across England and Wales.
To make commonhold the default tenure, the Housing Committee made recommendations to ensure commonhold works for homeowners. This included the suggestion to make the conversion to commonhold the default outcome of a collective enfranchisement.
Where leasehold will be banned for new flats, the Housing Committee said developers needed more detailed guidance on how to prepare for the move to commonhold.
Its report said some lenders already offered mortgages suitable for commonhold, and Charles Roe, former director of mortgages at UK Finance, gave evidence saying more would become available once lender systems had been adapted and staff had been trained on the commonhold tenure.
However, he said it could take at least two years to train estate agents, valuers, surveyors and conveyancers on the commonhold tenure.
The report also said failure to modernise the Land Registry’s legacy systems would risk the successful implementation of commonhold, and expressed concern that the government had not supported the organisation with funding to undertake this work.
The Housing Committee called for “greater digitisation and automation” to support the Land Registry to address its backlog of casework and prepare for a rise in commonhold applications.
The rights of shared ownership homeowners
The Housing Committee called for “urgent clarity” on what the legislation would mean for shared ownership homeowners, as it said the draft bill was “unclear about the voting rights they will have in commonhold associations”.
The draft bill proposes that the shared ownership provider would have some control over commonhold decisions during the 10-year initial repair period, and the report said this should be amended to allow shared owners and providers to share the vote instead.
It added: “Shared owners must not be shut out of decisions [that] directly affect them.”
The Housing Committee said that where the government does not believe shared owners should share the vote, the final bill must allow them to attend commonhold association meetings and participate as non-voting members.
Leaseholders have been waiting for too long
Florence Eshalomi MP, chair of the HCLG Committee, said: “Millions of leaseholders have been waiting for too long for successive governments to tackle the unfair leasehold system, cap ground rents, and put homeowners in control of the management of their buildings.
“The government’s draft bill takes a significant step towards delivering on these objectives but, in our report, we provide a blueprint for how the final bill can meet leaseholders’ expectations and live up to previous government pledges.”
She said leaseholders in England and Wales had worked hard to get on the property ladder, “yet for far too many, the leasehold system has turned the homeownership dream into a living nightmare”.
Eshalomi added: “A growing number are concerned that, without urgent reform, they will be trapped in homes with rising costs, and ultimately unable to sell.
“It is vital the government now recognises this urgency by bringing forward revised legislation to deliver justice for leaseholders as soon as possible. I urge the government to introduce the final bill in autumn 2026, so this will be the Parliament [that] finally tackles the long-standing inequities of leasehold.”
