In a statement today, the Ministry for Housing, Communities and Local Government said that by making commonhold the default tenure, homeowners would have a stake in the ownership of their building from day one, will not have to pay ground rent and will gain control over how buildings are managed.
Within its Commonhold White Paper, the government said that, following the introduction of a “comprehensive legal framework” for commonhold, new leasehold flats would be banned.
The white paper also said that new rules would require commonhold to work for “all types of developments”, such as mixed-use buildings and shared ownership homes.
There will also be “greater flexibility over development rights”, so developers can “build with confidence and [maintain] safeguards for the consumer.”
Crucially for the mortgage sector, the paper said it would give mortgage lenders “greater assurance with new measures to protect their stake in buildings and protect the solvency of commonholds”.
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This includes mandatory public liability insurance and reserve funds and greater oversight by commonhold unit owners to keep costs affordable.
There will be a strengthening of the management of commonhold, with updated rules of appointing directors, clear standards for repairs and mandating use of reserve funds.
There will also be an “enhanced offer” for homeowners so they can have more input in agreeing the annual budget, clarifying how owners can change local rules on how a building is run and additional protections.
A Code of Practice will outline how costs should be divvied out in commonhold, offering consumers more transparency and clarity.
The government added that it would launch a consultation to ban new leasehold flats later this year and was “committed to strengthening regulation of managing agents”.
The Leasehold and Commonhold Reform Bill will be published later this year.
| Commonhold | Leasehold |
| Introduced in England and Wales in 2002, it allows people to own property fully outright with no expiring term or need to extend a lease.
Common holders have a say on the annual budget for the building, including how charges for upkeep and maintenance are spent.
There is no ground rent and forfeiture is not possible.
Common holder can hire or fire a managing agent. |
Leasehold ownership gives the homeowner the right to occupy land or property for a set period, which goes back to the freehold once it expires.
Leaseholders in some cases may need to pay ground rent (this requirement was removed in 2022 for newer properties) and the landlord determines how the building is run and determines service charges. |
Government will ‘do what is necessary to bring the feudal leasehold system to an end’
Matthew Pennycook, housing and planning minister, said: “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.
“These reforms mark the beginning of the end for a system that has seen millions of homeowners subject to unfair practices and unreasonable costs at the hands of their landlords and build on our Plan for Change commitments to drive up living standards and create a housing system fit for the 21st century.”
Leasehold reform has been a hot topic issue for several years, with the Leasehold and Freehold Reform Act having to be rushed through Parliament last year before the dissolution of government ahead of the general election.
The act was criticised as it did not include any cap on ground rents but made it easier for leaseholders to buy their freehold, increase the lease extension to 990 years for houses and flats, and receive more transparency with service charges.
Leasehold reform was announced in the King’s Speech in July and the government reiterated its plans to reform the “feudal” leasehold system in November.
