The Government has announced the beginning of the end of the ‘feudal’ leasehold system

On 3 March 2025, the Ministry of Housing published the Commonhold White Paper which seeks to make landmark reforms on the leasehold sector. The Commonhold White Paper will be followed by the Leasehold and Commonhold Reform Bill which will be published later this year. Minister for Housing and Planning Matthew Pennycook who published the Paper said, “..commonhold is not merely an alternative to leasehold ownership, but a radical improvement on it. The publication of our Commonhold White Paper today is the beginning of the end of the feudal leasehold system.”

The ‘feudal’ leasehold system has been a staple tenure in England and Wales for centuries and is the most common form of flat ownership. However, following on from the Leasehold and Freehold Reform Act 2024, this is a further attempt by the Government to dilute its presence. Matthew Pennycook said “by taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners, not third-party landlords, who will own the buildings they live in and have a greater say in how their home is managed and the bills they pay”. The government have also proposed to launch a consultation to ban new leasehold flats later this year.

Commonhold ownership allows residents to own their property outright with no set ‘term’ in place and with no requirement to pay a ground rent. Under the commonhold system, the rights and obligations of all property owners are set out in the ‘Commonhold Community Statement’ which sets out how shared areas and facilities will be maintained and funded. Despite reforms introduced by the Commonhold and Leasehold Reform Act 2002, the tenure has struggled to gain any real traction. The Commonhold White Paper intends to change this.

Proposed Changes

• New rules that will enable commonhold to work for all types of developments such as mixed-use buildings. The new rules will also make it possible for shared ownership homes to exist with commonhold.
• Greater flexibility over development rights, helping developers build with confidence and maintaining safeguards for the consumer.   
• Giving mortgage lenders greater assurance with new measures to protect their stake in buildings and protect the solvency of commonholds – such as mandatory public liability insurance and reserve funds and greater oversight by commonhold unit owners to keep costs affordable.   
• Strengthening the management of commonholds, with new rules around appointing directors, clear standards for repairs, and mandating use of reserve funds.
• Providing an enhanced offer for homeowners – including requiring greater opportunities for democracy in agreeing the annual budget, clarifying how owners may change “local rules” over how a building is run and new protections for when things go wrong.

The Commonhold White Paper also seeks to introduce a new Code of Practice which will set how costs should be apportioned. 

It remains to be seen whether the Commonhold White Paper will make it through the parliamentary process but what is clear is that the government is committed to reforming the leasehold and commonhold sector.

If you would like any further information, please contact Mark Foxcroft or Zoe McLean-Wells.