Leasehold to be replaced with Commonhold in latest government property reform

The government has announced plans to ban the sale of new leasehold flats in England and Wales as part of its latest efforts to reform homeownership.

Currently, under the leasehold system, freeholders—third-party landlords—own the building, while leaseholders purchase the right to live in a flat within it for a set period. The government aims to replace this with a commonhold system, which is more aligned with international homeownership models. Under commonhold, residents would collectively own and control the buildings they live in.

While freeholders argue that leasehold is the most efficient way to manage large, complex apartment buildings, the government is pushing for change. Although no concrete plans have been laid out for converting existing leasehold properties to commonhold, officials say they are committed to making the transition easier.

A white paper published on Monday (3 March 2025) confirmed the ban on new leasehold flats and outlined a refreshed legal framework to support commonhold. A draft Leasehold and Commonhold Reform Bill, detailing how the new system will function, is set to be published later this year.

The legislation will apply to England and Wales, where approximately five million homes are leasehold—70% of them flats.

Housing Minister Matthew Pennycook stated that the reforms aim to end "unfair practices and unreasonable costs at the hands of landlords."

What is the difference between Leasehold and Commonhold?

A leasehold property is owned for a fixed period, after which ownership returns to the freeholder. In contrast, a commonhold property is owned outright, similar to a freehold house.

With commonhold, homeowners have direct control over their building’s annual budget and can collectively decide on management and maintenance. In a leasehold system, the freeholder or landlord determines communal costs and bills residents accordingly. Commonhold owners also have the power to hire or dismiss managing agents.

Unlike leasehold properties, commonhold homes do not incur ground rent charges. Additionally, forfeiture—where a leaseholder risks losing their home due to unpaid charges—is not possible under commonhold.

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