Government to introduce commonhold bill in late 2025

The government will introduce a draft commonhold bill as part of its plan to “bring the feudal leasehold system to an end” in late 2025, it has announced.

It said it will also reform ground rents, end the “injustice” of homeowners on freehold estates paying fees and removing the threat of forfeiture, alongside strengthened regulation of managing agents.

The government want to make commonhold the “default tenure” for all flats. Under commonhold, people who buy flats own their home outright, rather than for a set period of time. Commonholders can then join an association, which typically owns and manages shared spaces in the building.

It will bring forward a white paper on the proposals next year. The central focus of the bill will be “reinvigorating commonhold through the introduction of a comprehensive new legal framework”

Matthew Pennycook , housing minister, also said the government will consult during 2025 on “the best approach to banning new leasehold flats, so this can work effectively alongside a robust ban on leasehold houses”.

In a ministerial statement, Pennycook also said the Conservative’s Leasehold and Reform Act, which became law in the summer but hasn’t come into effect, has “serious flaws” and will require an “extensive programme of detailed secondary legislation” to bring into effect its provisions, which are broadly supported by the Labour government.

The act is intended to make it easier and cheaper for leaseholders to buy their freehold, increase standard lease extension terms to 990 years for houses and flats and provide greater transparency over service charges.

The government said in January it will bring forward a Leasehold and Freehold Reform Act provision to scrap a rule meaning leaseholders no longer have to wait two years after the point of purchase before exercising their right to extend their lease or buy their freehold.

In the spring, government will introduce a package of measures to make it easier for leaseholders to claim the ‘Right to Manage’ their blocks.

The government will also consult on several other measures next year including the regulation of managing agents and measures to make it easier for residents to challenge “unreasonable” service charge costs.

Pennycook said: “I am pleased today to set out the steps we will take to provide relief to those currently subject to unfair and unreasonable practices and to progress the wider set of reforms necessary to end the feudal leasehold system for good.”

Reacting to the announcements, Ian Fletcher, policy director at the British Property Federation described the timetable for reform as “broadly sensible”

He cautioned however: “It is important to bear in mind that commonhold is not just a legislative change it would also mean significant changes to mortgages, insurance, conveyancing, and property management, which will impact large-scale mixed-use developments as well as residential schemes. Billions of pounds are invested in large-scale mixed-use development and it is essential reform is mindful of the needs of these owners, as well as leaseholders.”