A government White Paper was published today that radically changes the way property will be managed.
(A White Paper is a policy document produced by the Government that sets out their proposals for future legislation. The plans for Commonhold were included in the Labour Party’s 2024 election manifesto.)
Today’s Commonhold White Paper states that “Commonhold” will be “reinvigorated” through a new legal framework. Importantly, the sale of new Leasehold flats and apartments will be prohibited, therefore Commonhold will become the norm.
Commonhold is a form of ownership (or tenure) for multi-occupancy developments. Each unit-holder owns the Freehold of their home, and a Commonhold or residents’ association owns and manages the common parts of the property. Commonhold is relatively new – it was introduced in 2004, although take-up has been low.
The proposed ban of new Leasehold flats will make Commonhold the default tenure. Currently Leasehold properties total about 5 milllion in England alone.
Housing minister Matthew Pennycook said the reforms “mark the beginning of the end” for the “feudal” Leasehold system, which subjects homeowners to “unfair practices and unreasonable costs”.
Under the new proposed reforms, homeowners will not have to pay additional costs such as ground rent and they will have more control over how their buildings are run. Under the existing system, third-party landlords can own a building’s lease and make decisions on behalf of homeowners.
There will be strict rules on how Commonhold buildings can be run. Rules will be designed so that properties don’t fall into disrepair and will allow Commonholders to split their buildings into separate sections. This would mean that only those Commonholders that benefit from an amenity (e.g. a garden area) would pay for and manage the amenity. The rules should give confidence to mortgage lenders.
A draft Leasehold and Commonhold Reform Bill outlining more detail will be published later this year, with legislation planned for this parliament. This could be law within four years.
The Government has also said it is “determined” to make converting easier for existing Leaseholders to become Commonholders. And in this regard, somewhat confusingly, a piece of actual legislation came into force today.
The Right to Manage (RTM) process has been overhauled as part of The Leasehold and Freehold Reform Act 2024. Click here to read what that means.
And if you need any legal advice or guidance on any of these matters, please do not hesitate to contact: Katie Miller on 01756 692884 or katie.miller@awbclaw.co.uk.
Further Reading:
RICS Welcomes Progress on Leasehold Reform
Should you extend your lease now? Or wait for the Leasehold Reforms?
Leaseholders: new Right to Manage provisions come into force today!
3 March 2025