Labour pledges to end ‘feudal’ leasehold system with commonhold overhaul

Labour has announced an initiative to dismantle the country’s leasehold system with its Commonhold White Paper.

The landmark move aims to revolutionise property ownership across the UK by revitalising commonhold, a system set to replace leasehold as the standard for flat buyers.

Under these sweeping changes, new leasehold flats will soon be prohibited, fulfilling a manifesto pledge to establish commonhold as the primary tenure.

This shift promises to grant homeowners an immediate share in their building’s ownership, eliminating ground rent and enhancing their authority over management decisions.

Labour says its reforms seek to abolish the antiquated leasehold structure, often labelled as feudal, ensuring flat owners are no longer treated as lesser homeowners.

Immediate relief to leaseholders

Housing and Planning Minister, Matthew Pennycook, 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.”

He added: “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 twenty-first century.”

Committed to fostering commonhold

The government says it is committed to fostering commonhold, which thrives around the world, it says, through new developments and simplifying conversions.

The result will see millions of existing leaseholders enjoying enhanced rights and stability.

Alongside banning new leasehold flats, ministers are rolling out immediate support for current leaseholders, such as removing the two-year ownership wait to purchase a freehold or extend a lease.

The White Paper outlines flexible rules for mixed-use and shared ownership properties, boosting development rights, and lender protections like mandatory insurance and reserve funds to maintain affordability.

A Leasehold and Commonhold Reform Bill will cement these changes into law, while a Code of Practice will clarify cost allocations, ensuring transparency.

Later this year, a consultation will refine the ban on new leasehold flats.

Reforms to the leasehold system

Propertymark’s head of policy and campaigns, Timothy Douglas, said: “Further reforms to the leasehold system will be welcome news for leaseholders up and down the country.

“Propertymark has long campaigned for changes to make it cheaper and easier to buy, sell and rent leasehold property.

“We know that there are complications and additional costs with extending leases and property with an escalating ground rent struggles to sell, so commonhold offers an opportunity to tackle these issues.”

He adds: “With 42% of Propertymark member agents favouring abolishing the leasehold system altogether, it’s clear to see there is frustration with the current system.

“However, understanding and awareness of the implications of commonhold is low.

“What’s key through the White Paper proposals is that any future changes make the system simpler, reduce costs and enable consumer confidence.”

Commonhold has ‘never caught on’

Scott Goldstein, a partner with the law firm Payne Hicks Beach, said that commonhold has ‘never caught on’ and the government’s announcement is the latest in a series of initiatives since 2002 to spread the use of commonhold.

He added: “The concern is to make sure that the system is ready to cope.

“Lenders must be encouraged to give mortgages to purchase flats held on commonhold.

“There must be robust financial controls in place to ensure commonhold blocks have the resources they need to manage their properties.”

He continued: “Finally, as commonhold blocks are always run by property owners, many more of us will be involved in property management.

“The government needs to provide easy to follow resources to educate and train all of us about the rights and responsibilities of commonhold.”