Housing, Communities and Local Government Select Committee: Draft Commonhold and Leasehold Reform Bill
Mark Chick gives evidence on the Draft Commonhold and Leasehold Reform Bill to the Housing Communities and Local Government Select Committee on 10th March 2026
Commonhold – the questions around conversion
Last week I was delighted to give evidence to the Housing Communities and Local Government Select Committee in parliament as part of the pre legislative scrutiny of the draft Commonhold and Leasehold Reform Bill.
You can see the full proceedings by clicking on the link below.
https://parliamentlive.tv/event/index/9e863508-12f3-44f4-816a-25c915e5cfd0?in=10:40:32
The parliamentary website produces a full transcript of what is said and a link to this appears here:
https://committees.parliament.uk/oralevidence/17296/pdf/
I was giving evidence on behalf of the Association of Leasehold Enfranchisement Practitioners (‘ALEP’) in my capacity as a director of the Association.
ALEP supports the government’s intention to reform leasehold and reinvigorate commonhold – although, it is clear to me that this process needs to be managed carefully.
Whilst the Select Committee is looking at commonhold and specifically the Draft Commonhold and Leasehold Reform Bill (‘CLRB’), the fact that many of the key provisions of the Leasehold and Freehold Reform Act 2024 (‘LAFRA’) remain unimplemented means that there is a key interplay between the two.
The unimplemented valuation reforms in LAFRA are key
In my submissions I echoed the Committee’s request for sight of the proposed amendments to LAFRA to fix ‘the loophole which means that the 2024 Act goes far beyond the intended reforms to valuation and that undermines the integrity of the amended scheme.’ Further details of this are as set out in Matthew Pennycook’s letter to Florence Eshalomi MP dated12th February 2026.
This letter was written by the minister explaining the short delay in bringing the CLRB forward.
Mr Pennycook’s intention is to ‘rectify’ when the CLRB is introduced to parliament. It seems to me that a good time to have sight of these proposed amendments is now, rather than when the Draft Bill is introduced to the House so that it can be considered in its entirety. It seems somewhat counter to the principle of an open and accountable legislative process to have a draft bill before us now without those amendments. We otherwise seem to be set to follow what has become a very ‘modern’ approach to legislation with a significant volume of new provisions being added to a draft statute once it is before parliament.
Why the emphasis on this point? Simply because, although the draft CLRB puts forward a working version of commonhold (version 2.0 being a great improvement on the current version) so many of the material points that will determine its success or failure, particularly around the question of conversion, will depend on the valuation mechanism that is to be used, not only on enfranchisement but also when non-participating leaseholders look to buy into the commonhold by exercising their rights under the provisions of the rights that section 52 of the draft bill envisages.
As drafted the valuation mechanism is to be determined under section 52(2) of the CLRB and the regulations to be made under section 52(8)(b). These regulations are yet to be drafted and for the reasons that I mentioned during my submissions, could well become ensnared in the same sorts of issues that the Law Commission considered when looking at the ‘Right to Participate’ provisions in its supplemental note to its 21st July 2020 report and recommendations see: https://cdn.websitebuilder.service.justice.gov.uk/uploads/sites/54/2025/12/Note-on-the-right-to-participate-final-N13.pdf
Managing the right of later participation
This helpful paper from the Law Commission sets out the difficulty in appropriate drafting for the valuation of the interest of someone who later buys into a collective.
In the new commonhold world, and following the introduction of LAFRA, once an enfranchised collective has converted to commonhold the interest in the freehold relating to any non-participant is to be converted to a commonhold unit held by the former freeholder. Doing this reduces the amount that the flat owners have to pay to buy the freehold, but leaves questions to be answered about how these arrangements will work in practice.
The non-participant has a ‘remainder lease’ (i.e. a legacy leasehold within the commonhold). They cannot do anything with this on its own and if they want to sell their flat, they must buy out the interest belonging to the former freeholder and merge their lease into the commonhold unit. This is done by serving a notice and this will trigger a valuation process. However, what about the situation where the collective has previously paid value to buy out other parts of the property such as the common parts or other development rights or value, or has had to cover other costs which cannot be recovered under the valuation mechanism? How will the original members of the collective who have taken the risk and underwritten the cost of the exercise ensure that they will ‘get their money back’?
One of the reasons that the Law Commission parked the discussion on the ‘right to participate’ was because it was not clear how the equity of participation could be dealt with fairly.
My concern is that the current mechanism looks as if it is going to reflect back to the valuation mechanism set out under LAFRA and this relates to a valuation which looks a lot like a valuation for lease extension and/ or on a collective will not allow the recovery of any ‘hope’ or ‘marriage’ as these are to be specifically excluded from the calculation. This may potentially leave the members of the collective with a shortfall in recovery.
Ensuring that later participation is equal
If the government is serious about encouraging take up of commonhold on conversion, then they need to ensure that the ‘right to participate’ does not trade more favourably after a freehold has been purchased than before. If that were to be the case, then this will stall not only collective enfranchisement but also conversion to commonhold and therefore sits against the long-term policy objective. The earlier participants may also be faced with a shortfall against their original outlay.
I believe these valuation provisions are very material and as such not something that can be dealt with by regulations but rather will require primary legislation. If the government walks down the line of seeking to implement these by way of regulations, then they may well lay themselves open to further Human Rights Act challenges, which will no doubt delay implementation.
There is criticism in the academic space of the extent to which delegated legislation (the power to make regulation by way of statutory instruments) avoids full legislative scrutiny and whilst many aspects of the CLRB can potentially be dealt with in this way, in my view any elements central to the valuation process cannot.
Whatever else happens, I feel that it is really important that we see the drafting of the proposed regulations (or schedule to the CLRB or LAFRA) that will deal with these points in early course as they will go to the heart of what a flat owner will pay.
A managed and phased approach to implementation
Whilst the session on 10th March focused on conversion and there are no doubt various points of detail to be perfected to make this workable, I believe that if the implementation of commonhold it to succeed, a phased approach to implementation is what is required.
If commonhold 2.0 is to be fully accepted by the property market, it seems logical that the first roll-out should be for newbuild property to allow developers and lenders to get used to it and for the market to fully understand and digest it as an asset class.
Once this has been done, we can then move on to the finer points of detail such as the treatment of legacy leaseholders within commonhold and the valuation points that will arise for those seeking to crystalise their value and share this with the former freeholder when exercising their right to buy the commonhold to their unit on sale.
The next steps
I look forward to the next phase of the Select Committee’s work and the evidence to be heard this week including the views of lenders, who will be key to its successful implementation.
Alongside my ALEP colleagues and the members of RICS and the Law Society involved in this, I look forward to assisting both those drafting and the parliamentarians who will debate this Bill to ensure that the legislation and the reforms that it brings are fit for purpose in the 21st Century.
Mark Chick
15th March 2026
