Housing minister Matthew Pennycook said the reforms “mark the beginning of the end” for the “feudal” leasehold system, which subjects homeowners to “unfair practices and unreasonable costs”.
There are two main forms of property ownership in England and Wales – freehold and leasehold.
The leasehold system in England and Wales dates back to medieval times. The idea was that powerful families could retain ownership of their land as freeholders, while renting out plots for people to live in and work on.
Under the current leasehold system, third-party landlords can make decisions on behalf of homeowners. During the tenure, leaseholders are also forced to pay ground rent costs, which can escalate.
Why is the Government abolishing the leasehold system?
The proposal to bring the leaseholds system to an end comes after years of campaigning and complaints by leaseholders about the unaffordable service charges, as well as poor and sometimes potentially dangerous conditions of buildings.
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Leaseholders have also been particularly affected by the cladding scandal.
The Government’s plan to abolish leasehold is in line with its manifesto commitment.
He added that the reforms build on Labour’s Plan for Change commitments to drive up living standards and create a housing system fit for the twenty-first century.
A commonhold is a different form of ownership for a multi-occupancy development. Each unit-holder will own their home, and a third-party will own and manage the common parts of the property.
A Commonhold White Paper published on Monday states commonhold will be “reinvigorated” through a new legal framework and the sale of new leasehold flats will be banned.
The Government has also said it is “determined” to make conversion to commonhold easier for existing leaseholders.
What will the changes mean for home buyers?
The Ministry of Housing said the changes will mean that homeowners will have a stake in the ownership of their buildings from day one, not have to pay ground rent, and will gain control over how their buildings are run and the bills they pay.
They will also have the power to hire or fire a managing agent who works in their interests, unlike in leasehold where one is appointed by the landlord.
How does the system operate in other countries?
Commonhold has had success in other parts of the world, including Europe, New Zealand, Australia and the US.
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