England and Wales to Abolish Leasehold System, Introducing Commonhold as New Standard

The longstanding leasehold system in England and Wales is set for elimination before the next general election, according to an announcement by Housing Minister Matthew Pennycook. This decision aims to halt the sale of new leasehold flats and will instead adopt commonhold tenure as the standard model. The reform seeks to provide homeowners with increased authority over their property management, thereby addressing widespread dissatisfaction over the current system.

Minister Pennycook criticized the existing leasehold structure, which he described as "feudal." Under the present arrangement, third-party landlords typically possess the lease, thus controlling decisions related to building management and imposing charges on homeowners. People residing in leasehold properties frequently complain about soaring fees and declining housing conditions, inspiring these significant reforms.

Under the proposed changes put forth in a new commonhold white paper, leasehold property sales for new flats will no longer be permitted, and a reinvigorated commonhold framework will become mandatory. Homeowners will no longer need to pay additional charges such as ground rent and will gain greater input regarding building management and related expenditures.

The government's strategy aligns closely with promises outlined in Labour's manifesto, emphasizing both immediate relief for current leaseholders and a definitive long-term shift away from a system characterized as unfair and expensive. The government also intends to facilitate the transition of existing leasehold properties into commonhold.

While the British Property Federation voiced support for the reform's intentions, the group urged the authorities to proceed cautiously. Ian Fletcher, the Federation's policy director, highlighted that large mixed-use developments have complex management requirements. He recommended providing training for owners taking responsibility under commonhold and called for clear guidelines for transitioning from leasehold to commonhold. Fletcher emphasized the need to thoughtfully assess the pros and cons before fully implementing the commonhold system.

The Ministry of Housing, Communities and Local Government confirmed that a draft leasehold and commonhold reform bill will be issued later this year, detailing precisely how the revised commonhold system will be structured. The legislation is poised to affect around five million leasehold properties across England and Wales.