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Commonhold white paper and consultation on banning leasehold flats expected next year
The housing minister has said the government will consult in 2025 on banning new leasehold flats, and will publish a white paper on reforms to commonhold in the next few months.
In a new written statement, Matthew Pennycook said the latter measure would sit alongside taking “decisive first steps” to making commonhold the default tenure by the end of this parliament.
The statement follows pledges set out in the King’s Speech in July, in which the government said it would publish draft legislation on leasehold and commonhold reform, with a view to the latter superseding the former.
Commonhold differs from leasehold in that people who buy flats own their ‘unit’ outright, rather than for a set period of time.
Unit owners are then entitled to become part of a commonhold association, which jointly owns and manages common parts of buildings such as shared spaces, roofs, walls and other structural elements.
The tenure type, which is used widely in other parts of the world, was introduced in England and Wales in the early 2000s and has been on the statute books since 2022 but is rarely seen.
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At present there are fewer than 20 commonhold blocks in England and Wales. The government has described the commonhold legal framework as “out of sync” with modern development methods, and said the current rules around conversion from leasehold to commonhold are “unworkable”.
Mr Pennycook reiterated this week that reinvigorating the tenure through a new legal framework will be a central focus of the draft Leasehold and Commonhold Reform Bill, to be published during the second half of 2025. He said the white paper would be issued “early” next year.
“The draft bill will also consider a number of vital reforms to the existing leasehold system,” Mr Pennycook said. “The government remains firmly committed to its manifesto commitments to tackle unregulated and unaffordable ground rents, and we will deliver this in legislation.
“We will remove the disproportionate and draconian threat of forfeiture as a means of compliance with a lease agreement,” he added. “And we will consult on new reforms to the Section 20 ‘major works’ procedure that leaseholders must go through when they face large bills for such works.”
Mr Pennycook said that alongside the proposed new framework governing commonhold, the government would consult during 2025 on “the best approach to banning new leasehold flats, so this can work effectively alongside a robust ban on leasehold houses”.
Under the Leasehold and Freehold Reform Act 2024, which was hurried through parliament before it was dissolved for the election, a ban was imposed on selling most new houses under a leasehold tenure.
In this week’s statement, the housing minister also said the government would be taking steps to rectify some “serious flaws” in the existing act and to “effectively implement [it] as quickly as possible”.
He said that in January 2025, the ‘two-year rule’ under which leaseholders must wait before extending their lease or buying their freehold will be removed.
In spring next year, the act’s ‘right to manage’ provisions will be brought into force, which Mr Pennycook explained are intended to enable leaseholders in mixed-used buildings to take over management from freeholders, and to ensure that leaseholders making claims do not have to pay freeholders’ costs.
Mr Pennycook also said that the government will consult next year on a range of other elements in the act, including its ban on buildings insurance remuneration and provisions on service charges.
His update on leasehold legislation comes just days after he told a committee that delivering the government’s target of 1.5 million homes this parliament will be more difficult than the Labour Party expected in opposition.
In response to the update, the National Leasehold Campaign (NLC) said: “We are also pleased to see that the government is committed to fulfilling their manifesto in bringing forward commonhold as the default tenure during this parliament which effectively abolishes leasehold tenure in the future.
“Our main concern now is the fate of existing leaseholders who are currently suffering at the mercy of unregulated managing agents and unscrupulous freeholders. The government’s published intention to ‘act as quickly as possible’ will not be quick enough and we are already seeing the despair from some NLC members who are facing bankruptcy due to escalating service charges.
“Since 2018 leaseholders have heard time and time again from former government ministers that they will end the abuses but in reality nothing has changed for existing leaseholders. Using our homes as an endless cash cow continues and millions remain trapped.
“Now we have an official government timeline to follow, leaseholders will not forgive further delays or watering-down of the Law Commission recommendations – failure to deliver is not an option. This government will be judged on their actions not their words.”
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