Creating a new version of leasehold may create more issues – the sensible course is to repair what exists

Mary-Anne Bowring GUEST WRITER Co-managing director, Ringley Group

Successive governments have presented commonhold as the answer to the leasehold problem, and this current one seems to believe that unveiling its leasehold reform bill just before Christmas will give the country’s millions of leaseholders an ideal present.

Abolish the lease, hand every owner a share of a company, and the grievances vanish. It is an appealing proposition, but also a costly one, and it rests on an assumption that deserves to be challenged: that every leaseholder wants to run their own building.

In my experience, most do not. They bought a home, not a second job

The cost of collective control

Consider what collective control involves. Someone must act as the accountable person under fire safety legislation and carry the legal exposure that comes with it. Someone must chase neighbours for arrears, knowing a friendly relationship on the landing may not survive a county court claim. Someone must decide whether the roots of a communal tree threaten an adjoining property, and may be sued if they get it wrong.

Then there is insurance: directors who set the sum insured without a professional valuation discover, at the worst moment, that a claim leaves everyone under-insured. There is the trust tax return nobody knew needed filing, the late accounts at Companies House and the fines that follow, and the fire risk assessment whose action list must be worked through, including the hard task of persuading owners to fix their own doors.

Add the paperwork of transparency. Residents rightly demand scrutiny, but volunteers rarely know how to handle an AGM, a disclosure request or a section 22 request. The technical traps are unforgiving. Service charges are disallowed because the lease’s budget mechanisms were flouted, or because company expenses were mixed up with service charge money. Demands are found invalid. Section 20B notices are served late, and money everyone assumed was recoverable is gone.

“Friendships on the landing may not survive a county court claim over arrears”

None of this is hypothetical. These are the routine failures of amateur management, and commonhold removes none of them. It hands them to every unit owner as a permanent, non-delegable burden.

Commonhold also inherits a weakness right-to-manage companies know well: enthusiasm fades. The few who volunteered in year one move away, tire out or fall out with neighbours, and investor landlords and absentee owners have no interest in participating. A system that depends on sustained volunteer effort across decades is fragile by design.

Conversion is not free. Existing buildings face legal work, valuations, consents, new governing documents and the dismantling of long-established lease structures. Lenders must be persuaded and mortgage products developed for an unfamiliar tenure. Those costs fall, directly or indirectly, on the people the reform is meant to help, while a generation of homes sits in limbo between two systems.

Fixing the wrong system

The premise that leaseholders must own the freehold to gain control is also weaker than it sounds. What frustrated leaseholders want is a say over who manages the building, what it costs and how well it is run. Right-to-manage already offers that, without the expense and disruption of tenure change.

The difficulty is that right-to-manage works less well than it should. The process is technical, landlords can contest claims on procedural grounds, handover of funds and records can be slow and grudging, and qualifying rules exclude some buildings.

The sensible course is to repair what exists. The government has already simplified the claim procedure and removed many grounds for freeholders to resist, bringing more certainty and making applications less risky. Eligibility has been widened. The next step is to penalise obstruction and delay in handing over documents and money.

“Right-to-manage preserves the right that matters, the power to take control from a poor landlord”

Why not also publish plain guidance and standard templates for insurance, accounts, tax and fire safety compliance, and give leaseholders a straightforward route to choose professional management while retaining ultimate control, so they can dismiss an agent without becoming one?

This preserves the right that matters, the power to take control from a poor landlord, while recognising that control of the management entity and day-to-day management are different things. Those who want deeper involvement can take it; those who do not can delegate, while contributing to the costs.

Commonhold will suit some developments, particularly small, close-knit blocks with engaged owners. Nothing here argues against offering it, but a national policy that treats it as the destination for all leasehold buildings ignores how people actually live. Millions want secure, well-run homes and a fair say, not directorships.

Fix right-to-manage, and we deliver that faster, cheaper and with far less risk.