The centuries-old leasehold system is facing its biggest challenge in modern history after Propertymark backed Government plans to phase out the sale of new leasehold flats in favour of commonhold ownership.
The move comes amid mounting political and industry pressure to dismantle what ministers have repeatedly described as an “anachronistic” and “feudal” system that has left millions of flat owners trapped by escalating service charges, rising ground rents and increasingly unsellable homes.
The Ministry of Housing, Communities and Local Government launched its consultation on banning new leasehold flats earlier this year as part of the draft Commonhold and Leasehold Reform Bill, which would make commonhold the default ownership structure for new flats in England and Wales.
Under commonhold, flat owners would own their property outright while collectively managing shared parts of the building, removing the need for a separate freeholder and effectively ending ground rents on new developments.
DAMAGED CONFIDENCE
Propertymark has now thrown its support behind the reforms, arguing that years of consumer frustration have severely damaged confidence in the flat ownership market.
Research previously conducted by the professional body found that 94% of leaseholders regretted buying a leasehold property, while 93% said they would not buy another leasehold home. Meanwhile, 76% of property agents reported that leasehold flats are becoming increasingly difficult to sell.
The issue has become particularly acute in London and other urban markets where flats dominate housing supply and where some leaseholders have faced soaring service charges, remediation costs linked to cladding, and difficulties securing mortgage finance.
Housing minister Matthew Pennycook recently described the Government’s ambition as bringing about an “orderly end” to leasehold, although ministers have acknowledged the transition will be legally and operationally complex.
Industry bodies broadly support the direction of travel, though concerns remain over how existing leaseholders will be treated and whether mortgage lenders, developers and managing agents are fully prepared for large-scale adoption of commonhold.
Propertymark warned that forcing existing leaseholders to convert before selling could unfairly burden homeowners already struggling with rising housing costs.
FAIRER SYSTEM
Timothy Douglas (main picture, inset), Head of Policy and Campaigns at Propertymark, says: “Consumers have faced years of uncertainty and frustration with leasehold properties, from escalating charges to difficulties selling their homes.
“A move to commonhold has the potential to create a fairer, more transparent system that gives homeowners greater control and confidence.
“It’s important, however, that existing leaseholders are protected during the transition and that buyers fully understand how commonhold will work in practice.”
Despite widespread support for reform, experts warn the overhaul could still take years to fully implement, with fewer than 20 commonhold developments created since the system was first introduced in 2002.
