Labour to ban centuries-old leasehold system in England and Wales

Yahoo

03-03-2025

Labour will ban the sale of new leasehold homes by the end of this parliament in what ministers described as the end for a centuries-old 'feudal' system.
Leasehold systems, where third-party landlords own the building belonging to several flats, will be replaced with 'commonhold' schemes, which will see all owners have more control over the buildings in which they live.
New buildings will no longer pay 'ground rent', which is the charge currently owed to landlords for use of the land, and forfeiture of properties will be banned, a white paper published on Monday proposed.
Owners will be expected to vote on the annual budget for the building, and what their service charges will be. A full draft of the legislation will be published later this year.
Matthew Pennycook, the housing minister, 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.
'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 21st century.'
There are 4.8 million leasehold properties in England, equivalent to a fifth of English housing stock.
Last October, Mr Pennycook warned that leasehold reform could take as long as five years, describing it as a 'whole of Parliament commitment'.
In its manifesto, Labour said it would 'ban new leasehold flats and ensure commonhold is the default tenure'. The party went on to reiterate this promise in the King's Speech, also promising to regulate ground rents and to 'act quickly' to implement its reforms.
In May 2023, Lisa Nandy, the then-shadow housing secretary, said a future Labour government would bring forward legislation to abolish leasehold within 100 days. But in April, the party quietly dropped this pledge.
The previous Conservative government passed the Leasehold and Freehold Reform Act in the final days of its administration, but the legislation was significantly watered down, and did not deliver many of Michael Gove's promised changes. Mr Gove had previously proposed a ban on the sale of new leasehold homes.
Campaigners have argued for years that the leasehold system trapped owners in homes which were poorly maintained, paying thousands of pounds every year in service charges.
Service charges for leaseholders rose by 11pc between 2023 and 2024, according to estate agents Hamptons, to an average of £2,300.
Katie Kendrick, the founder of the National Leasehold Campaign, told the BBC it was 'paramount' that those already living in leasehold buildings were not left behind by the new legislation.
She said: 'While focusing on preventing future leasehold abuses is crucial, it's equally vital to address the plight of existing leaseholders currently bound by the inequitable leasehold system.
'Commonhold conversion mechanisms are essential to offer an escape route for those trapped.'
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