The UK Government has announced plans to phase out new leasehold flats by 2029 and reinvigorate Commonhold ownership, as outlined in the newly published Commonhold White Paper. Housing Minister Matthew Pennycook stated that these changes aim to end the “unfair feudal leasehold system” and ensure flat owners have equal rights to homeowners.
What is Commonhold?
Introduced in 2002, Commonhold allows flat owners to own their units outright while jointly managing shared spaces through a Commonhold Association. Unlike leasehold, there is no external landlord, giving owners more control over costs and maintenance. However, the system has struggled due to legal and financial hurdles, despite being successful in countries like Australia, New Zealand, and the U.S.
Proposed Changes
- The ban will only apply to new flats, not existing leasehold properties.
- Current leasehold flats can only convert to Commonhold if all owners and the freeholder agree.
- The government aims to implement most of the Law Commission’s recommendations to improve Commonhold.
Challenges Ahead
The White Paper is a step toward a functioning Commonhold system, but key issues remain:
- Insolvency risks for Commonhold companies.
- Inflexible management charges and developer concerns over handover rules.
- Lender reluctance due to provisions allowing 80% of owners to vote to dissolve a Commonhold.
With no immediate legislation in Parliament, the proposed Commonhold and Leasehold Reform Bill is expected to be complex and may require multiple legislative sessions to pass. While the 2029 deadline is ambitious, the government may set a transition timeline for all new flats to adopt Commonhold in the future.
Contact our Landlord & Tenant team
If you have a query concerning leasehold property, then please contact our expert Landlord & Tenant team by emailing leasehold@bishopandsewell.co.uk or call on +44(0)20 7631 4141.
The above is accurate as at 13 March 2025.
The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
