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The “feudal” leasehold system in England and Wales will be overhauled by the end of the current Parliament, the government has announced, as campaigners raise concerns about delays.
Millions of leaseholders currently own the right to use their property for a period of time and can pay hundreds in annual ground rent to a freeholder – on top of separate service charges.
Announcing a new timetable for reform, Housing Minister Matthew Pennycook said that commonhold – where people own their homes without an expiring lease – will become the default tenure before the next election.
Campaigners warned it may come too late to help current leaseholders trapped in exploitative arrangements.
Katie Kendrick, founder of the National Leasehold Campaign (NLC) said that, while she was “pleased” the government was fulfilling its manifesto promise to scrap leaseholds, it may not be quick enough for all.
“Our main concern now is the fate of existing leaseholders who are currently suffering at the mercy of unregulated managing agents and unscrupulous freeholders,” she said.
“The government’s published intention to ‘act as quickly as possible’ will not be quick enough and we are already seeing the despair from some NLC members who are facing bankruptcy due to escalating service charges.”
Outlining a specific timetable for leasehold reform for the first time, Mr Pennycook said elements of the Leasehold and Freehold Reform Bill, passed by the Conservative government earlier this year, would be implemented.
- From January, a “two-year rule” preventing leaseholders from extending their lease or buy their freehold for the first 24 months will be scrapped
- From spring next year, the government wants more leaseholders in mixed-use buildings to be able to take over management from their freeholders, and no longer have to pay their freeholder’s costs if they make a claim against them
- By the second half of next year, the government will outline how it will ban new leaseholds, after a consultation
Ministers will also consult on how leaseholders can more easily challenge unreasonable service charges, and require landlords to get court approval before passing their legal costs on to leaseholders.
As for current leasehold properties, Mr Pennycook said: “We will also engage on the conversion of existing flats to commonhold.”
Not all elements of the 2024 bill will be implemented however, as ministers say they have identified flaws “which would prevent certain provisions from operating as intended and that need to be rectified”.
There are about five million leasehold properties in England and Wales, with some owners saying they have experienced unjustifiably high ground rents or service charges, and issues with carrying out repairs.
Mr Pennycook said: “Given that millions of leaseholders and residential freeholders are currently suffering as a result of unfair and unreasonable practices, we appreciate fully the need to act urgently to provide them with relief.”
Natalie Chambers, director of the residential freehold association, said her organisation wanted to working with the government “to deliver meaningful and workable reforms”.
“We welcome the government’s recognition of the complexities around implementing leasehold reform, as well as the serious flaws in the legislative approach taken by the previous government,” she said.
In April, Labour dropped a pledge to introduce legislation abolishing leasehold within the first 100 days of winning power.
The changes are for England but the Westminster government says it will work closely with the Welsh government to implement reforms there.
Scotland does not have leasehold tenures, while Northern Ireland has just a handful of leasehold properties.
The government’s announcement was made after the BBC requested an interview for a day of special coverage Friday 22 November, looking at the scale and impact of leasehold issues.
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