Leasehold Reform in England and Wales: A Policy Debate Built on Assumptions

After a series of lengthy delays, the subject of leasehold reform has once again become a battleground for the Labour government, with a renewed focus on capping ground rents and reducing the relevance of freeholders. The political argument that Angela Raynor MP, puts forward is clear: leaseholders are paying unfair charges, investors are benefiting disproportionately, and reform is required to correct the imbalance.

However, much of the debate rests on simplified assumptions about how leasehold buildings are run in practice. In particular, the idea that freeholders “do nothing” has become central to the justification for reform. That claim does not reflect how most leasehold blocks actually operate, nor the weight of responsibility that a freeholder holds - and the risk/reward of being willing to do so.

If policy is developed on the basis of an incomplete understanding of the freeholder’s role, there is a risk that any reform may create new problems without resolving existing ones.

The Freeholder’s Role: Governance, Enforcement and Risk Management

Freeholders do more than collect ground rent. In many buildings, they are responsible for administering or overseeing servicechargesorted.co.uk/blogs/service-charge-disputes-what-cam-be-disputed-how-and-the-role-of-the-first-role-planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal'>service charge collection, enforcing lease terms, managing breaches, and ensuring that alterations carried out by leaseholders do not compromise the structure or safety of the building.

They also play a key role in preventing flats from being sold with outstanding servicechargesorted.co.uk/blogs/service-charge-disputes-what-cam-be-disputed-how-and-the-role-of-the-first-role-planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal'>service charge arrears, protecting the financial position of the block as a whole. These functions are not optional, and they are not trivial.

At a minimum, the freeholder acts as the legal authority responsible for governance and enforcement. These responsibilities exist regardless of whether they are visible to leaseholders on a day-to-day basis.

What Happens When Leaseholders Buy the Freehold?

Where residents collectively acquire the freehold, the responsibilities do not disappear. They are transferred.

Decisions still need to be made on servicechargesorted.co.uk/blogs/service-charge-disputes-what-cam-be-disputed-how-and-the-role-of-the-first-role-planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal'>service charge budgets, reserve funds, maintenance priorities, compliance, and long-term planning. Legal obligations remain exactly the same, even though the people making those decisions may now be volunteers rather than professionals.

Owning a share of freehold provides control, but it also creates risk and exposure. Resident directors take on legal and financial responsibility for decisions that carry real consequences both financially i.e., if the paperwork is wrong or late, and in terms of the health and safety of residents. The governance burden does not reduce simply because ownership changes.

This raises some serious practical questions:

• Is it realistic to expect unpaid leaseholders to carry out this role safely and effectively?
• Are they suitably skilled and equipped to do so?
• How many will do so altruistically, indefinitely for no reward?

Leasehold and Commonhold: Complexity Does Not Go Away

This leads to a question that is often avoided in the reform debate: should the governance role performed by freeholders be paid for, and if so, how?

Ground rent has historically been one way of remunerating freeholders for carrying out legal, administrative, and enforcement functions. There are also event fees, e.g., the leaseholder pays for the administration involved should they sell or request a licence to alter.

I am not advocating that the ground rent system has always been fair or proportionate, indeed the doubling of ground rents every 10 years and ground rents on houses (already abolished) were nothing short of scandalous. But devaluing the remuneration of the freeholder and putting the freeholders responsibilities in the unwary’s hands altogether creates a different problem.

If these responsibilities remain necessary, who is expected to carry them out? And who is accountable when mistakes are made? Expecting unpaid volunteers to manage complex legal and safety obligations introduces real risk, not just for the individuals involved, but for residents more broadly. And, when it goes wrong, whilst a commercial freeholder would have to pay up, we end up in a situation where leaseholders would effectively be litigating against themselves, certainly a lose lose situation.

Ground Rent and Remuneration: An Uncomfortable Question

This leads to a question that is often avoided in the reform debate: should the governance role performed by freeholders be paid for, and if so, how?

Ground rent has historically been one way of remunerating freeholders for carrying out legal, administrative, and enforcement functions. There are also event fees, e.g., the leaseholder pays for the administration involved should they sell or request a licence to alter.

I am not advocating that the ground rent system has always been fair or proportionate, indeed the doubling of ground rents every 10 years and ground rents on houses (already abolished) were nothing short of scandalous. But devaluing the remuneration of the freeholder and putting the freeholders responsibilities in the unwary’s hands altogether creates a different problem.

If these responsibilities remain necessary, who is expected to carry them out? And who is accountable when mistakes are made? Expecting unpaid volunteers to manage complex legal and safety obligations introduces real risk, not just for the individuals involved, but for residents more broadly. And, when it goes wrong, whilst a commercial freeholder would have to pay up, we end up in a situation where leaseholders would effectively be litigating against themselves, certainly a lose lose situation.

Leasehold Reform: Reducing Injustice or Reallocating Risk?

There is no doubt that parts of the leasehold system have failed leaseholders. Escalating ground rents, poor transparency, and imbalance of power have caused real harm and need to be addressed. But reform that focuses primarily on removing freeholders or income streams risks overlooking a more practical issue: the legal and regulatory burden of managing residential buildings does not reduce when ownership structures change.

Managing blocks of flats requires navigating a labyrinth of legislation spanning leaseholders'>building safety, fire regulations, consultation requirements, accounting standards, and landlord and tenant law. When these responsibilities are underestimated or handled without appropriate expertise, the consequences are not theoretical—they include enforcement action, fines, litigation, and risk to resident safety.

This is where professional management matters. Whether buildings are leasehold, share of freehold, or transitioning under reform, compliance obligations remain complex and unforgiving. Ringley Block Management provides professional, regulated management that ensures buildings are run correctly, transparently, and in accordance with the law. Where legal interpretation, enforcement, or dispute resolution is required, Ringley Law offers specialist legal expertise to support landlords, resident groups, and managing agents alike.

Leasehold reform may change structures, but it does not remove legal responsibility. The risk is not reform itself, but assuming that complexity disappears with it.