Oh No!! The UK government is still insisting on its plans to ban new leasehold flats and making commonhold the default tenure, marking a significant shift in property ownership. This change aims to give homeowners greater control over their properties and eliminate the restrictive and costly leasehold system.

The statements regularly heard that "under the new measures, flat owners will no longer be treated as secondary homeowners. Instead, they will have a direct stake in their buildings, enabling them to influence management decisions and costs" is a half truth, why? because by far most new developments are sold with Resident Management Companies in place, often called a ManCo or RMC. And, the benefits promised by commonhold by and large already exist, and where a ManCo does not exist then Right to Manage (RTM) is a no fault process that puts owners in control also. Commonhold is not the solution.

Commonhold will only make things worse for millions of leaseholders

A ManCo and Right to Manage Co, as would a Commonhold hold the responsibility to provide the services to a building or estate, whether that be managing cleaning, gardening, fire risk, roof repairs or whatever. Arguably, the situation is better with a ManCo and Right to Manage Co because ultimately, if the ManCo does go bust there is a Freeholder who has to step in. So our view is that Commonhold will only make things worse for millions of leaseholders. If Commonhold was any good then the take up would have been huge over the last 20 years. The government needs to focus on fixing systemic problems with build quality, recourse to funding to fix problems on blocks under the 11m and 18m rule.

Commonhold: are most leaseholders actually ready and aware to be responsible for absolutely everything?

However, the move to Commonhold aligns with the government’s broader strategy to improve living standards and modernise the housing system. The government claims that the reforms will end leasehold arrangements that limit homeowners’ rights, true currently leaseholders are not the freeholder and not ultimately responsible for everything, but are most leaseholders actually ready and aware to be responsible for absolutely everything?

Commonhold: will see the end of lease extensions for thousands

Under the current leasehold system, leaseholders do not own their properties outright, and ownership reverts to the freeholder after a set period. Also, leaseholders must pay ground rent and servicechargesorted.co.uk/blogs/digital-solution-can-improve-the-whole-process-by-making-it-faster-and-more-transparent'>service charges and depending on whether they have a tri-party lease or have claimed the right to manage (RTM) they will have different levels or perhaps little or no control over building management. With commonhold as the standard model, homeowners will own their properties permanently without lease extensions or additional fees. This will eliminate ground rent payments and give homeowners a direct say in building management, making property ownership more transparent and fair.

Leasehold: will lease extensions get cheaper with the government initiatives in play

As well as Commonhold, the government has also pledged to improve protections for existing leaseholders. Reforms will simplify purchasing freeholds and extending leases, cutting costs and removing unnecessary delays. Homeowners will also gain stronger rights to challenge unreasonable servicechargesorted.co.uk/blogs/digital-solution-can-improve-the-whole-process-by-making-it-faster-and-more-transparent'>service charges imposed by freeholders and managing agents.

Regulation of Managing Agents: is it needed or not?

A new legal framework will regulate managing agents to prevent unfair practices. The government plans to introduce a Code of Practice outlining clear rules on cost allocation, ensuring that charges are transparent and justifiable.

Commonhold ownership, already used in several countries, grants homeowners full property ownership without time limits or dependence on landlords. To promote its adoption, the government will introduce measures that apply to all types of developments, including mixed-use buildings and shared-ownership homes.

The government say that commonhold is part of its commitment to ending what they call exploitative practices linked to leasehold ownership, it could simply regulate rather than introduce commonhold, and in fact, the good news they are doing so as well. There are planned changes to prevent landlords from imposing excessive servicechargesorted.co.uk/blogs/digital-solution-can-improve-the-whole-process-by-making-it-faster-and-more-transparent'>service charges and unfairly increasing costs. Homeowners will have greater legal avenues to challenge such charges, reducing financial burdens and ensuring accountability.

Commonhold: can existing leaseholds be converted to commonhold?

The government has also pledged that legal reforms will also simplify converting existing leasehold properties to commonholds. Homeowners will be given clearer guidance on making the transition, and financial and legal support will be available to facilitate the shift. Under the new system, homeowners will automatically become part of a commonhold association upon purchasing their property. This association will oversee building management and maintenance, ensuring decisions are made collectively rather than imposed by external landlords.

New Commonhold regulations will mandate greater democratic participation in budget planning. Homeowners will vote on financial decisions, ensuring that maintenance costs are predictable and agreed upon. The rules will also establish clear standards for building repairs and reserve fund usage, reducing disputes over responsibilities and expenses. Under the new system, mortgage lenders will be provided with additional protections. This includes requirements for liability insurance and reserve funds to mitigate financial risks associated with commonhold properties. These measures aim to boost lender confidence and support the growth of the commonhold market.

Commonhold: is the end of the threat of forfeiture for many

This is good: Forfeiture, a practice that allows landlords to repossess properties over lease breaches, will also be addressed. The government will introduce safeguards preventing homeowners from losing their properties unfairly.

A draft Leasehold and Commonhold Reform Bill will be published later this year, setting out the legal framework for these changes. The government will also launch a public consultation to gather feedback on the transition to commonhold, ensuring stakeholders are involved in shaping the final reforms.

These measures aim to create a fairer housing system by removing outdated leasehold structures and promoting genuine homeownership. The changes are expected to enhance financial security for millions of homeowners while ensuring the long-term sustainability of property ownership in the UK.

Frequently Asked Questions

What is Commonhold ownership and how does this differ to leasehold?

Commonhold ownership allows homeowners to own their property fully without a lease. It removes the need for lease extensions, ground rent payments, and landlord control over building management.

How will Commonhold impact existing leaseholders?

Existing leaseholders will benefit from lower costs when purchasing their freehold or extending their lease. They will also have stronger rights to challenge unfair servicechargesorted.co.uk/blogs/digital-solution-can-improve-the-whole-process-by-making-it-faster-and-more-transparent'>service charges and building management decisions.

Will Commonhold apply to all new developments?

Yes, when this becomes law, commonhold will be the default for all new flats, including mixed-use and shared-ownership developments. The government will also introduce measures to encourage existing buildings to transition to commonhold.