UK Housing Minister Pledges to End Leasehold System.
Housing Minister Matthew Pennycook has pledged to end the centuries-old leasehold system in England and Wales by the end of this parliament. His commitment marks the next step toward a complete ban on new leasehold developments.
The government's move comes after years of complaints from leaseholders about high service charges and deteriorating buildings.
With 5 million homes in England still under leasehold agreements, Pennycook promises a radical change to protect homeowners from the burdens of this outdated system.
The Problems with Leasehold and the Push for Reform
Under the leasehold system, homeowners don't own their land outright but lease it from a freeholder. Leaseholders have long faced issues like crippling service charges, poor building maintenance, and slow repairs, often leading to dissatisfaction with the system. Some even refer to leaseholders as "second-class homeowners."
Pennycook emphasized that the leasehold system is a feudal relic. "Freehold was used in the Domesday Book," he said.
"The concept of leasing dates back to serfs working land." He added that the arrangement is fundamentally unfair, as it keeps leaseholders under the control of freeholders who benefit from the property but provide little in return.
The Shift to Commonhold: The New Housing Solution
The government's solution to these issues is to promote the commonhold system. Under this model, flat owners would jointly own and manage the buildings they live in, eliminating the need for leasehold agreements.
Pennycook described this shift as ending a "feudal system" and making commonhold the default housing tenure for future developments.
A white paper will lay out a roadmap for the changes, which include proposals to:
- Make it easier for leaseholders to manage their properties collectively.
- Create strict guidelines to ensure buildings are well-maintained and that mortgage lenders trust the system.
- Allow buildings to be split into sections so that only those who use certain amenities would pay for their upkeep.
Delays and Frustration Over the Slow Pace of Reform
Despite the commitment to reform, many leaseholders are frustrated by the slow pace of action. Former Housing Secretary Michael Gove also proposed leasehold reforms, but his efforts were hindered after Downing Street's interference.
Pennycook acknowledges that the process has been slow, noting the frustration of leaseholders and the sense of "consultation fatigue".
He explained that the rushed nature of previous reforms led to flawed outcomes, such as allowing building owners to vote on whether leaseholders could manage their own properties. This experience has made the government more cautious, as they aim to ensure the reforms are done right.
What’s Next: A Commitment to Lasting Change
The government's goal is clear: to end the leasehold system and make commonhold the standard for homeownership. However, the reforms will take time to fully implement. Pennycook has emphasized that these changes will have a lasting impact on housing in the UK, addressing issues that have plagued leaseholders for generations.
"While it may take time, we are committed to making these reforms work for all leaseholders," Pennycook said.
Key Proposals in the White Paper:
- Easier Property Management for Leaseholders: Making it simpler for leaseholders to manage and maintain their buildings.
- Confidence for Mortgage Lenders: Ensuring that commonhold properties are viable and trustworthy for lenders.
- Smarter Building Ownership: Allowing the division of buildings into sections, so only those who benefit from certain amenities pay for them.
The Bigger Picture: A More Fair Housing System
Pennycook's efforts reflect the government's broader goal of addressing the housing system's long-standing issues. The transition to commonhold aims to eliminate an unfair system and provide leaseholders with the freedom and control they deserve.
By overhauling the leasehold system, Pennycook believes the reforms will create lasting generational impact, offering a more equitable and sustainable housing solution for millions.
