‘Insultingly modest’ leasehold reform bill does nothing for flat owners, report says

For any future legal disputes, freeholders should be banned from recouping their legal and professional fees from leaseholders, the report suggested.

It also called for compulsory licensing and registration for ground rent investors and managing agents.

“Punitive” clauses in the Building Safety Act 2022, which deprive leaseholders of protections against remediation costs if they opt to buy their freehold, should also be removed.

Going further than the Law Commission, which recommended several leasehold reforms in 2020, the report advocated for the ‘right to manage’ participation threshold to be reduced to 15%, where leaseholders can take control of service charges and replace the managing agent without buying the freehold.

Commonhold has been a legal tenure since 2002, but only 20 properties have been created with the tenure since then.

Last week, the government’s decision to ignore flats in its long-promised leasehold ban was branded a “significant omission” by the Chartered Institute of Housing.

Labour shadow housing minister Matthew Pennycook branded the government reforms as “thin gruel” and said Labour would “fundamentally and comprehensively reform the leasehold system”.

Harry Scoffin, co-founder of Commonhold Now and author of the report, said the government’s leasehold reform plans were “insultingly modest” and “do nothing to liberate existing leaseholders in flats en masse”.

He said: “Leasehold will only be axed on new build houses, of which only a handful are created each year anyway, and the opportunities for consumer detriment are minimal now with ground rents banned. The real money and abuse is going on in leasehold flats.

“The most shocking thing of all is that future flatted developments will not be required to be sold on a commonhold or share of freehold basis for resident control and democratic management, as is already the position in Scotland and virtually everywhere else in the world.”

Over the weekend, The Guardian reported that a number of Conservative MPs, particularly in constituencies that have large numbers of flats, are preparing to force the government to toughen up its planned reforms if the bill that falls short of campaigners’ demands.

In response, a spokesperson for the Department for Levelling Up, Housing and Communities said: “We have already made significant improvements to leasehold – ending ground rents for most new residential leases – and will make it easier and cheaper for leaseholders to extend their lease or buy their freehold.

“The secretary of state has been clear that we will bring forward legislation to protect leaseholders as soon as is possible.”