Government to introduce commonhold proposals

This afternoon, in oral questions to the Ministry of Housing, Communities and Local Government, Matthew Pennycook is expected to announce proposals aimed at making commonhold the default tenure for flats. As part of the government’s commitment to leasehold reform, Pennycook is also due to confirm that the sale of new leasehold flats will be banned and that a commonhold white paper will be published later this year.

The move is intended to honour the government’s manifesto pledge to improve property ownership rights and remove perceived unfairness in the leasehold system. Commonhold, which allows homeowners to collectively own and manage their buildings, has struggled to gain traction since its introduction in 2002.

The Association of Leasehold Enfranchisement Practitioners (ALEP), which has worked with the government on leasehold reform, welcomed the announcement while highlighting the challenges that remain. Mark Chick, director of ALEP and a Partner at Bishop & Sewell LLP, said ALEP welcomes the publication of the proposed white paper in relation to commonhold and we note the recognition of the challenges that will need to be overcome to make it work properly for all types of development.

The announcement signals the government’s intention to amend commonhold to make it more practical and effective. However, ALEP stressed that significant work is required to ensure the system is fully fit for purpose. Chick added that whilst the announcement signals the proposed moves to amend commonhold, there is a great deal of work to be done to ensure that commonhold is made ‘fit for purpose’.

A key element of today’s proposal is the planned ban on the sale of new leasehold flats once commonhold reforms have been implemented. However, ALEP cautioned that this transition would take time and that public expectations should be managed accordingly. Chick stated that today’s announcement signals a proposal that once commonhold has been introduced the sale of new leasehold flats will be banned, but such a position will only be possible if and when all of the necessary reforms to the commonhold system have taken place. He urged the government to be realistic in managing the expectation of the public as to when this is likely to be as, in our estimation, this is likely to take some significant time.

ALEP also expressed concerns about the impact of a leasehold ban on existing property owners. Mark Chick warned that if there is a proposal to prevent the sale of leasehold flats in the future, we would urge caution around this, as there are (and will remain) many existing leasehold properties. He emphasised that both the government and the wider media need to be careful not to talk down existing leasehold structures to the detriment of existing flat owners.

ALEP has previously advised the government on leasehold reform and confirmed its willingness to continue working with policymakers on the proposed changes. Chick concluded that ALEP has advised the government on leasehold reform previously and remains available to work with government in relation to the proposed changes.

As the property sector awaits further details, today’s announcement marks a significant step towards the wider adoption of commonhold. ALEP and other industry experts will now focus on ensuring the reforms deliver practical benefits for homeowners, developers, and the housing market as a whole.