The government has unveiled major plans to ban the sale of new leasehold flats in England and Wales. The proposal aims to phase out the controversial leasehold system in favor of commonhold, a structure that gives homeowners full ownership of their property and a share in the management of the building.
What Is Leasehold and Why Is It Being Scrapped?
Under the current leasehold system, a freeholder (or landlord) owns the building, while flat owners purchase a lease that allows them to live in the property for a set period—sometimes as long as 999 years.
For years, leaseholders have argued that this system is unfair and outdated, leaving them at the mercy of freeholders and property management companies. The government agrees and is pushing for a transition to commonhold, a form of ownership more common in other parts of the world.
What Is Commonhold?
Commonhold is an alternative to leasehold, where flat owners collectively own and manage their building, much like a resident-run housing association. This means:
✅ More control over maintenance costs
✅ No lease to extend—owners hold their flats indefinitely
✅ Transparency in building management decisions
Commonhold has been legal in England and Wales since 2002 but has seen little uptake due to legal and financial barriers. The government now plans to “reinvigorate” the system with a clearer legal framework.
What Happens to Existing Leasehold Flats?
One big question remains unanswered: What about the five million existing leasehold properties?
The government has promised to make converting leasehold flats to commonhold easier, but the details are still unclear. Experts believe that a smooth transition could involve:
- Giving leaseholders a simpler, cheaper path to take control of their buildings
- Allowing existing leaseholders to buy their freehold more easily
- Ensuring mortgage lenders support commonhold to encourage adoption
What Do Freeholders Say?
Not everyone is happy with the changes. Freeholders and property management firms argue that leasehold is the best way to manage complex buildings, ensuring maintenance is properly handled. They worry that commonhold could lead to poorly maintained buildings if owners fail to organize themselves effectively.
What’s Next?
The government will publish a Leasehold and Commonhold Reform Bill later this year, outlining the full details of the transition. In the meantime, if you’re thinking of buying a leasehold flat, it may be worth considering how these changes could affect your investment.
The end of leasehold is coming—but how smooth the transition will be remains to be seen.
