The UK government has announced sweeping reforms to abolish leasehold ownership for new flats in England and Wales, replacing it with commonhold ownership. The move aims to give homeowners full control over their properties and eliminate costly leasehold charges, such as ground rent.
Under the proposals, the sale of new leasehold flats will be banned, and commonhold will become the default tenure. A Commonhold White Paper has been published, outlining the new legal framework, with a Leasehold and Commonhold Reform Bill expected later this year.
What is Commonhold ownership?
Commonhold ownership gives homeowners full, permanent ownership of their property, unlike leasehold, where ownership is limited to a fixed term before reverting to the freeholder.
Under the new system:
- Homeowners own their property outright with no lease expiry or the need to extend a lease
- There is no ground rent—a cost that has been criticised as an unfair burden on leaseholders
- Residents collectively manage their building through a commonhold association, allowing them to hire or fire managing agents
- Homeowners vote on annual budgets, service charges, and long-term maintenance, ensuring financial transparency
- Disputes are managed through a Commonhold Community Statement (CCS), a rulebook that sets out rights, responsibilities, and shared costs.
The government has committed to implementing most of the Law Commission’s recommendations to strengthen commonhold, which has struggled to gain traction in the UK despite its widespread use in countries like Australia, New Zealand, the US, and much of Europe.
"The beginning of the end" for leasehold
Housing Minister Matthew Pennycook described the reforms as a major step towards ending the leasehold system, which he called "feudal" in nature.
"This marks the beginning of the end for a system that has subjected homeowners to unfair practices and unreasonable costs," he said. "For too long, leaseholders have found themselves at the mercy of third-party landlords, with little control over their own homes. Our reforms will put an end to that and give homeowners the power they deserve."
The proposed changes aim to eliminate financial and legal risks associated with leasehold, including forfeiture, a controversial rule that can see leaseholders lose their home if they breach their lease agreement. The government has committed to ending the disproportionate threat of forfeiture.
Why is Leasehold being abolished?
The leasehold system has been widely criticised for its high service charges, restrictive clauses, and escalating costs. Many leaseholders struggle with:
- Lack of control over service charges and property management
- Ground rent payments, which offer no benefit to homeowners
- Legal complexity when buying, selling, or extending a lease
While leasehold flats will no longer be sold, the government has yet to announce specific plans for existing leaseholders, though additional rights and reforms are expected.
What happens next?
The Commonhold White Paper has set out the framework for reform, with a Leasehold and Commonhold Reform Bill expected later this year. If passed, the law will apply to new developments, while existing leaseholders may receive new rights to transition to Commonhold.
The government’s reforms aim to modernise property ownership, making it more transparent, fair, and homeowner-led. While the changes have been welcomed by housing campaigners and leaseholders, some developers and freeholders have raised concerns about the impact on property management and investment models.
As the bill progresses, the government will need to address outstanding questions about how Commonhold will work in practice, particularly for existing leaseholders seeking to transition to the new system.