Shake-up of leasehold system proposed

Homeowners with leasehold properties could find it easier to buy the freehold or extend their leases, under changes to the leasehold system proposed by the Law Commission.

There are currently at least 4.3m leasehold homes in England alone, with many leasehold property owners facing steep ground rents and high fees.

The Law Commission wants to establish commonhold as a preferred alternative to leasehold for all newly built flats.

What is commonhold?

Commonhold is a type of property ownership. Unlike owners of leasehold property, commonhold homeowners will be able to own their individual flats or houses in a building or on an estate forever with a freehold title and no landlord.

The rest of the building or estate which forms the commonhold is owned and managed jointly by all the owners through a commonhold association.

Help for existing leaseholder property owners

The Commission wants to make things better for existing owners of leasehold properties too by improving the process by which they can buy the freehold or extend their lease.

Lease extensions can often be arranged for 50 or 90 years, but the reforms would see leaseholders have the right to arrange a lease extension for a term of 990 years. It also says that ground rents should be reduced to zero.

Where leaseholders are buying the freehold of their homes, the Commission recommended that they should no longer need to pay the freeholder’s legal costs at tribunals.

Plans also include making it easier and cheaper for leaseholders to take over the management of their building without buying the freehold. This could be done by exercising their ‘right to manage’ which enables leaseholders to take control of repairs, services, improvements, maintenance and insurance. The government must now consider the proposals and discuss whether they will make it onto its legislative timetable.

Professor Nick Hopkins, Commissioner for property law said: “The leasehold system is not working for millions of homeowners in England and Wales. We have heard how the current law leaves them feeling like they don’t truly own their home.

“Our reforms will make a real difference by giving leaseholders greater control over their homes, offering a cheaper and easier route out of leasehold, and establishing commonhold as the preferred alternative system. The reforms will provide a better deal for leaseholders and make our homes work for us, and not somebody else.”