The government's plan to abolish leasehold for new-build flats and replace it with commonhold is a seismic shift in property ownership law. Set to affect five million individuals in England and Wales, the proposed reforms aim to empower homeowners by giving them control over their buildings, shared facilities, and costs.
Housing Minister Matthew Pennycook has pledged that residents should have a direct stake in maintaining their homes, rather than third-party landlords. The Commonhold and Leasehold Reform Bill would make commonhold the default for new constructions, allowing flat owners to collectively own and manage their building through a reserve fund.
Many leaseholders are already feeling the strain of rapidly increasing service charges and ground rents, with some facing annual bills exceeding £5,400. Take Sally, 74, who saw her London flat's service charges surge from £2,600 to over £5,400 in one year, causing significant anxiety about affordability.
While Professor Nick Hopkins supports the commonhold model, believing it offers greater autonomy for flat owners, freeholders highlight that many leaseholders – 93% according to the English Housing Survey – are satisfied with being owner-occupiers. However, this survey does not specifically address satisfaction with being a leaseholder.
Commonhold is not new; Tony Blair's government introduced it into law in 2004. Yet, its adoption by developers has been minimal, with just 18 commonhold developments recorded across England. This raises questions about whether the system can truly become the default for new constructions or if its implementation will uncover fresh challenges.
The Labour Party welcomes the principle of leasehold reform but will scrutinise the legislation to ensure it benefits homeowners without creating unintended consequences in the housing market.