Government to end leasehold flat system with new commonhold plans
BBCMinisters outline plans to abolish the leasing system in England and Wales.
A proposal to change the law will prohibit the sale of new rental apartments.
Under the lease system, a third-party landlord known as a freeholder owns the building and the leaseholder purchases the right to occupy his apartment for a fixed period of time.
The government said it wants to turn to the way homes are built, which is more consistent with the rest of the world, known as Commonhold, where homeowners own a portion and control the buildings they live in.
But freeholders say leasing is “the most effective way to manage large and complex apartment buildings.”
A white paper published on Monday said it would ban the sale of new rental apartments and “revitalize” through a new legal framework.
The government said a draft lease and co-reform bill will be released later this year, including details on how the new system works.
The new legislation will apply to England and Wales, where about five million rental homes are available.
Housing Secretary Matthew Pennycook said the reform would end “unfair practices and unreasonable costs in the hands of landlords.”
The leaseholder can feel that he cannot control the cost of repairing and maintaining the exterior of the building.
After the BBC, about 1,000 people contacted the BBC investigation About the service charges in the rental block last year.
Kasia Tarker purchased a bedroom apartment in Southall, Southall, in 2022.
Her service fee bill has increased from about £65 per month in 2022 to £200 per month this year.
She said she felt helpless and could not afford the charges.
“I’m going to have to try selling apartments or becoming homeless and I don’t know what to do.”
FirstPort took over the development management of Kasia in 2023, and he said “increases in areas such as insurance, health and safety costs” are beyond its control.
Cassia said she wanted more control over her service allegations, but the government’s joint proposal was targeted at the new building and would not help her in the current situation.
Another leaseholder, Jean Hopkin, who contacted the BBC, said her service charges for three-bedroom apartments in Sheffield increased by 356% – from £106 a month to £483 for four years due to high fees.
Southampton’s Jenny Baker is also struggling to find buyers as “unreasonable” service costs up to £7,200 a year.
“The apartment block is in a bad condition. The windows are not cleaned and there are black molds outside the building – do I pay for it?
“I felt stuck – I could never get rid of it. I felt absolutely out of control, which made me feel very anxious.”
Rendall & Rittner, who manages Jean and Jenny’s buildings, said the company “does not profit from it or increase any fees.”
According to real estate company Hampton, the amount paid by leaseholders for public maintenance and services in buildings increased by 11 per cent in buildings in England and Wales between 2023 and 2024, an average of £2,300.
The company responsible for managing the buildings said the rise in costs could be attributed to legal spending, including energy prices and higher inflation rates, but many leaseholders believe the costs are unfair.
Under the current system, appoint a freeholder or landlord of the management agent. The government said that under the community system, residents will have greater autonomy over the money they pay and the people they appoint to safeguard.
What is the difference between leasing and co-owning?
- After a fixed time, the leased property will be restored to the freeholder. Public property is directly owned, just like the Buddha’s house.
- Under the leadership of the community, homeowners have a say in the annual budget of their buildings. Under the lease system, the freeholder or landlord sends bills to the residents to pay public fees. Residents will be able to hire and fire management agents.
- There is no ground rent charge in public property.
- In the case of a community, it is impossible to confiscate, which means residents will not be threatened by the loss of their homes.
Natalie Chambers, director of the Residential Freehold Association (RFA), said the measures “should not be considered a trade-off between lease and co-ownership.”
“Millions of leaseholders nationwide are very satisfied with their tenure and we firmly believe that leases are the most effective way to manage large and complex apartment buildings.”
A common system would mean “residents will face greater financial and legal liability to maintain and manage”, she added.
“Major steps”
The National Leasing Movement (NLC) said it was “happy” by the announcement, saying today’s white paper is an important step forward.
But NLC founder Katie Kendrick said the people who currently live in rental buildings have not been forgotten.
“While it is crucial to focus on preventing future rental abuse, it is equally critical to address the plight of existing leaseholders currently being restricted by unequal rental systems,” she said.
“A common conversion mechanism is crucial to providing escape routes for trapped people.”
Mr PennyCook said the government will “continue reforms to help millions of leaseholders who are currently suffering”.
Other reports by Jade Thompson
