End of leasehold flats will create a litigation nightmare

Comprehensive Abolition of Leasehold for Flats: A Transformative Approach to Property Ownership

Introduction to Systemic Property Ownership Reform

The United Kingdom Government has embarked upon a groundbreaking legislative journey to fundamentally reshape property ownership structures, with a particular focus on dismantling the long-standing leasehold system for residential properties. This sweeping reform represents a pivotal moment in British housing policy, promising to redefine how flat owners interact with their property assets.

Legislative Milestones and Context

Recent Legislative Achievements

The Leasehold and Freehold Act, which received Royal Assent in May 2024, marks a significant turning point in property legislation. Its immediate implementation of restrictions on new leasehold houses signalled the government’s commitment to addressing systemic inequities in property ownership. Crucially, the Act’s provisions facilitating enhanced management capabilities for existing leaseholders came into force on 3 March 2025, providing immediate practical benefits to millions of property owners.

Current Leasehold Landscape

Statistical analysis reveals the profound scope of leasehold properties within the United Kingdom:

• In England, over 70% of leasehold homes are flats
• Approximately 4.8 million properties fall under the leasehold category
• These properties represent roughly 19% of the entire English housing stock
• In Wales, approximately 16% of properties are leaseholds
• Leasehold properties account for around 12% of all property transactions, according to Land Registry data

Proposed Legislative Reforms

Comprehensive Transformation of Flat Ownership

The forthcoming Leasehold and Commonhold Reform Bill, anticipated for publication in late 2025, represents a revolutionary approach to property ownership. The government’s key proposal involves an outright prohibition on the sale of new flats under traditional leasehold agreements.

Emergence of Commonhold: A Collaborative Ownership Model

Key Characteristics of Commonhold

Commonhold ownership introduces a radical departure from traditional leasehold arrangements, offering several transformative benefits:

1. Collective Building Management: Flat owners collectively own and manage their entire building, fostering a collaborative and transparent approach to property maintenance.
2. Financial Transparency: The model eliminates opaque ground rents and provides homeowners direct control over maintenance and associated expenditures.
3. Governance Structure: Each property owner becomes a member of a commonhold association, responsible for building governance and management decisions.
4. Accountability Mechanism: Managing agents are directly accountable to homeowners rather than external landlords, ensuring more responsive and owner-centric property management.

Historical Context and Recommendations

The proposed reforms draw substantial inspiration from the Law Commission’s 2020 report, “Reinvigorating Commonhold: The Alternative to Leasehold Ownership”. This comprehensive study highlighted significant structural weaknesses in the existing leasehold framework, explaining why commonhold has struggled to gain traction since its introduction in 2002.

Implications for Property Professionals

Adaptation and Training Requirements

Property professionals must undergo substantial preparatory work to successfully navigate this transformative legislative landscape:

• Educational Imperative: Agents must develop comprehensive understanding of the commonhold system’s legal framework
• Transactional Expertise: Detailed knowledge of management structures and ownership implications becomes critical
• Client Advisory Skills: Professionals must be equipped to explain the nuanced benefits and responsibilities of commonhold ownership

Evolving Role of Managing Agents

The shift towards commonhold is anticipated to significantly recalibrate the traditional role of managing agents. With unit owners assuming more direct management responsibilities, external management services may experience reduced demand, necessitating innovative service adaptations.

Propertymark’s Pivotal Role in Reform

Propertymark has been instrumental in driving leasehold reform, with a sustained advocacy campaign spanning multiple years:

Key Advocacy Milestones

• 2017-2022: Continuous lobbying for leasehold market fairness
• June 2022: Successfully advocated for the Leasehold Reform (Ground Rent) Act, eliminating ground rent for most new long residential leases
• 2018: Provided critical evidence to parliamentary housing committees and government consultations
• 2021: Published “Leasehold: A Life Sentence” report, generating significant parliamentary discourse

Collaborative Activism

Working alongside the National Leasehold Campaign, Propertymark has been crucial in raising awareness about systemic abuses within the leasehold property system, ultimately contributing to these transformative legislative changes.

A New Era of Property Ownership

The proposed reforms represent more than mere legislative adjustment—they signify a fundamental reimagining of residential property ownership, prioritising transparency, fairness, and collective empowerment for homeowners across England and Wales.

The Reality

Commonhold is the norm in most Mediterranean countries, with residents taking care of the management of their own blocks, but without a formal management company, there are always problems as individual residents become less and less inclined to contribute and over time, the blocks deteriorate, relations between the residents begin to break down and all to often the situation becomes intolerable. Lifts not working for weeks and months at a time, essential maintenance delayed again and again and in other countries, the only remedy is for the residents to voluntarily instruct a management company.