Significant reform in commonhold tenure

The UK government’s proposal to ban leasehold for new flats represents a critical milestone in the ongoing journey towards commonhold reform. The Law Society of England and Wales has voiced its support for this initiative in its response to the Ministry of Housing, Communities and Local Government’s consultation. Law Society president Mark Evans remarked, “The Draft Commonhold and Leasehold Reform Bill, together with this consultation, represent a significant step towards introducing commonhold as the default tenure for new flats.”

The society emphasises the importance of minimising any exemptions to the leasehold ban during the transition period. They suggest that doing so will help avoid potential loopholes that could allow the continued exploitation of leasehold arrangements. Furthermore, they have underscored the necessity of ensuring all aspects of the conveyancing system are fully prepared for this shift, especially HM Land Registry and mortgage lending, stating that “Time must be given for the profession to update its documentation, systems and training.”

Also, the Law Society recommends a staggered implementation approach, commencing with wholly residential new blocks. This phased strategy aims to foster market confidence and ensure that all stakeholders become familiar with the new commonhold tenure before it extends to more complex developments.

Evans highlighted the core objectives of commonhold, saying, “Commonhold aims to fix the structural separation between the person who controls the building and the people who pay for and live in it, that exists in leasehold.” However, he cautioned that its success hinges on its alignment with the realities of the current housing market, the lending environment, and the conveyancing process. The Law Society has committed to supporting its members in navigating these upcoming changes as this significant shift toward commonhold becomes a reality