The UK Government has taken a major step towards property ownership reform, aiming to abolish leasehold for flats and replace it with commonhold ownership as the new standard in England and Wales.
What’s Changing?
The Leasehold and Freehold Reform Act, which received Royal Assent in May 2024, already banned leasehold for new houses. From 3rd March 2025, measures to make it easier for existing leaseholders to manage their buildings also came into force. Now, further changes are on the horizon, with plans to prohibit new leasehold flats and transition to commonhold ownership.
Why Is This Important?
Currently, over 70% of leasehold properties in England are flats, equating to around 4.8 million homes—19% of England’s total housing stock. In Wales, leaseholds make up 16% of properties and represent around 12% of all property transactions, according to Land Registry data.
The Government’s White Paper, published ahead of the Leasehold and Commonhold Reform Bill due later in 2025, outlines a proposal to ban new flats being sold under leasehold agreements. Instead, buyers will own their homes outright through a commonhold system.
What Is Commonhold?
Commonhold allows flat owners to collectively own and manage their building, removing the need for a separate freeholder. Key benefits include:
No ground rent
More control over maintenance and management costs
Greater transparency and accountability
Each homeowner will automatically become part of a commonhold association, which will oversee the building’s management. If needed, the association can employ a managing agent, but unlike in leasehold arrangements, the agent will be accountable to the residents, not a landlord.
Will This Work?
The Law Commission has been advocating for commonhold reform for years, highlighting issues with leasehold ownership in their 2020 report:
Reinvigorating Commonhold: The Alternative to Leasehold Ownership. Despite being introduced in 2002, commonhold has yet to gain widespread popularity in England and Wales, largely due to legal and financial barriers. However, with these proposed reforms, the Government is looking to make commonhold the new norm.
What Does This Mean for You?
If you are buying, selling, or currently own a leasehold flat, these changes could have a significant impact on your property’s future management and value. If you have any questions about how these reforms might affect you, get in touch with Chesworths Estates today—we’re here to help.
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