07 May 2025
Labour has announced plans to ban the sale of new leasehold flats in England and Wales by 2029, with commonhold set to become the default form of ownership for flats. While leasehold houses will remain unaffected for now, this change could reshape how flat ownership works across the country.
What is Leasehold?
If you buy a leasehold property, you own it for a fixed number of years (usually decades), but not the land it stands on. The freeholder (often a landlord or developer) owns the building and the land. Leaseholders typically pay ground rent and service charges for maintenance of shared areas like hallways, lifts, and roofs.
There are downsides. Freeholders can control what leaseholders can or can't do with their property, such as banning pets or blocking renovations. Extending a lease can be costly, and some owners pay thousands each year in service charges. On top of that, mortgage lenders are often reluctant to lend on properties with shorter leases (usually under 80 years), making them hard to sell.
What’s Changing?
Labour’s proposed plan would:
This follows a dropped plan by the previous government to reform the system. The Housing Minister, Matthew Pennycook, called leasehold “feudal” and said these reforms aim to protect homeowners from unfair costs and practices.
What is Commonhold?
Commonhold, introduced in 2002 but rarely used, allows you to own your flat freehold, while jointly owning the building and land with other flat owners. This is done through a commonhold association, where all owners have a say and a legal responsibility for shared spaces.
Some key differences:
While commonhold is widely used in countries like Scotland, England and Wales have been slow to adopt it. One issue is that mortgage lenders remain cautious about lending on commonhold properties.
What About Existing Leaseholders?
Currently, the changes apply only to new properties. However, an investigation is ongoing into how best to support current leaseholders. Some relief may come through the 2024 Leasehold and Freehold Reform Act, which aims to:
When Will This Happen?
Draft legislation is expected in late 2025, followed by parliamentary review. If passed, the changes could begin rolling out in the years that follow, with the full leasehold ban for flats expected by 2029.
This shift toward commonhold could offer homeowners greater control and long-term security. However, there are still practical hurdles to overcome, especially with financing and the management of shared spaces. If you’re a leaseholder or thinking about buying a flat, it’s worth keeping an eye on how these reforms develop.
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