Why replacing leasehold may be easier said than done
Reforming Leasehold Ownership is Often More Challenging Than It Seems
Why replacing leasehold may be easier - For Sally, a 74-year-old retiree, the purchase of her two-bedroom flat in 2021 was supposed to mark a peaceful transition into her later years. Yet, she found herself grappling with significant stress due to the leasehold system. With over five million leaseholders in England and Wales, Sally is among more than 1,000 individuals featured in a BBC investigation seeking to uncover the burdens faced by this community. Many report that escalating service charges and ground rent costs have left them feeling powerless over their living spaces.
When Sally moved into her London flat, annual service charges were initially around £2,600. However, in one particularly tough year, these fees skyrocketed to over £5,400. "That was a really bad year," she recalls. "Me and my fellow owners were very stressed and anxious. There were tears, and I remember us talking about how we were going to pay." The government’s new Commonhold and Leasehold Reform Bill aims to overhaul this system, proposing the end of leasehold ownership and its replacement with commonhold.
A Fractured System
Commonhold, a model where residents collectively own and manage buildings, is set to become the standard for new developments. Housing Minister Matthew Pennycook emphasized this shift in April, stating:
"The people who should own buildings, and who should exercise control over their management... are not third-party landlords but the people who live in flats."
Critics argue that while the system has evolved over centuries, the core principle remains: homeowners pay for the right to occupy land they do not fully own.
The leasehold structure traces its roots to the Middle Ages, when William the Conqueror granted land to nobles who leased it to others for fixed terms. Although modern leasehold differs significantly, the dynamic of paying for usage rather than ownership persists. For nearly 60 years, governments have sought to address these issues, with commonhold repeatedly proposed as an alternative. Introduced in 2004 under Tony Blair’s administration, the model has seen minimal adoption, as the Land Registry notes only 18 commonhold developments in England.
Commonhold: A New Approach
Commonhold operates by eliminating the role of freeholders and empowering residents to vote on decisions related to shared facilities and maintenance. Homeowners are responsible for contributing to a reserve fund and either managing the property themselves or hiring a managing agent. Nick Hopkins, a UCL land law professor and adviser to the House of Commons Housing Committee, supports the change. "After years of examining the issue, I’m convinced commonhold is the right direction for the government," he says. "Flat owners would still pay for upkeep, but they’d gain much more autonomy in decision-making."
John Bartholomew, 81, and his wife have lived in one of England’s few commonhold developments in Somerset for 12 years. The site includes two blocks of flats and five town houses, with residents gathering annually to discuss matters like the shared car park. "I’ve been lucky to live in a place where people agree on the work that needs to be done," he says. "But if a renegade came in, we might struggle. We have to agree that part of the fee will be allocated to specific projects, like repairs."
As commonhold gains traction, questions remain about whether it can truly replace leasehold without introducing fresh challenges. Will the centuries-old system evolve smoothly, or will new complexities arise? The answer may depend on how well this collective model adapts to modern housing needs.