Commonhold

Matthew Pennycook Excerpts

Monday 3rd March 2025 Written Statements

[The Minister for Housing and Planning (Matthew Pennycook)]

For far too many leaseholders, the reality of home ownership has fallen woefully short of the dream—their lives marked by an intermittent, if not constant, struggle with punitive and escalating ground rents, unjustified permissions and administration fees, unreasonable or extortionate charges, and onerous conditions imposed with little or no consultation. This is not what home ownership should entail.

We remain steadfast in our commitment to providing leaseholders with greater rights, powers and protections over their homes. Alongside the extensive programme of detailed secondary legislation that we are bringing forward to implement the remaining provisions of the Leasehold and Freehold Reform Act 2024, we will further reform the existing leasehold system by legislating to tackle unregulated and unaffordable ground rents, removing the disproportionate and draconian threat of forfeiture, acting to protect leaseholders from abuse and poor service at the hands of unscrupulous managing agents, and enacting remaining Law Commission recommendations on enfranchisement and the right to manage.

However, while we are working to provide leaseholders subject to unfair and unreasonable practices with relief as quickly as possible, we will not lose sight of the wider set of reforms necessary to honour our manifesto commitment to finally bring the feudal leasehold system to an end.

The Government are determined to ensure that commonhold becomes the default tenure. To take a crucial step toward realising that objective, we are today publishing a “Commonhold White Paper” that sets out the proposed new commonhold model for home ownership in England and Wales.

Commonhold is a modern home ownership structure that is used widely around the world. It is not merely an alternative to leasehold ownership, but a radical improvement on it. At the heart of the commonhold model is a simple principle: the people who should own buildings, and who should exercise control over their management, shared facilities and related costs, are not third-party landlords, but the people who live in flats within them and have a direct stake in their upkeep.

In enabling flats to be owned on a freehold basis, commonhold ensures that the interests of homeowners are preserved in perpetuity rather than their value depreciating over time as it does under leasehold, and it transfers decision-making powers to homeowners so they have a greater say over how their home is managed and the bills they pay, as well as flexibility to respond to the changing needs of their building and its residents.

Unlike many other countries across the world that moved away from leasehold ownership structures long ago, flats here continue to be owned, almost universally, on a leasehold basis.

That is partly the result of the natural inclination to stick with the familiar, but also because there was more money to be made by selling leasehold flats through the significant additional income to be generated from leasehold homeowners. Yet the shortcomings of this form of home ownership are obvious and the case for decisive change is overwhelming.

Commonhold was introduced in England and Wales in 2004 through the Commonhold and Leasehold Reform Act 2002, but for a variety of reasons it failed to establish itself and is now out of date. Having learnt the lessons of that false dawn, it is now time to finish the job. Commonhold-type models are used all over the world. The autonomy and control that it provides for are taken for granted in many other countries. It can and does work and this Government are determined, through both new commonhold developments and conversions to commonhold, to see it take root.

As the White Paper makes clear, we intend to reinvigorate commonhold through the introduction of a comprehensive new legal framework based on the vast majority of the recommendations made by the Law Commission in its 2020 report. This new legal framework will be supplemented by a ban on the sale of new leasehold flats, so that commonhold becomes the default tenure.

We will consult later this year on the best approach to banning new leasehold flats so it can work effectively alongside a robust ban on leasehold houses, and we will seek input from industry and consumers on other fundamental points such as potential exemptions for legitimate use and how to minimise disruption to housing supply.

I know my ministerial colleagues in Wales share our desire to deliver these bold reforms and so we will continue to work jointly with the Welsh Government to ensure they apply across England and Wales.

[HCWS488]