Government to ban new leasehold flats in England and Wales

The UK government is set to ban new leasehold flats in England and Wales, aiming to overhaul home ownership.

The current leasehold system, where freeholders own buildings and leaseholders buy the right to occupy flats, is intended to be replaced by commonhold, giving homeowners ownership and control over their buildings.

While freeholders argue that leasehold is effective for managing large complexes, the government is committed to making it easier to convert existing leaseholds to commonhold.

A white paper has announced the ban on new leasehold flats and the introduction of a new legal framework for commonhold, with a draft bill expected later this year.

Building management companies attribute the rising costs to legitimate expenses like energy prices and inflation, but many leaseholders feel these costs are unfair and constantly rising.

Currently, freeholders appoint managing agents, but under commonhold, residents would have more control over payments and maintenance decisions.

Leasehold vs. Commonhold:

• Leasehold: Property reverts to the freeholder after a fixed period.
• Commonhold: Property is owned outright, like a freehold house.
• Commonhold Benefits: Homeowners control the annual budget, hire/fire managing agents, and face no ground rent or forfeiture threats.

Reactions:

The National Leasehold Campaign (NLC) is delighted with the announcement, calling it a significant step forward.

NLC founder Katie Kendrick emphasised the importance of addressing the needs of current leaseholders, stating that commonhold conversion mechanisms are essential for those trapped in the current leasehold system.

Housing Minister Matthew Pennycook assured that the government would continue implementing reforms to help millions of existing leaseholders.

If you need further information or legal advice, including conveyancing services in England, please contact our dedicated UKRE team: Anna Douglass, Alastair Hargreaves, Caren Vidamour, and Hannah Damant, who will be delighted to assist.