Centuries-old leasehold system to be abolished in England and Wales | Leasehold

The housing minister has promised to abolish the centuries-old leasehold system in England and Wales before the end of this parliament, as the government takes the next steps towards an outright ban on new leasehold developments.

Matthew Pennycook said he was committed to ending the feudal-era system – which applies to 5m homes in England – after years of complaints from leaseholders about crippling service charges and crumbling buildings.

With some leaseholders complaining about the slow pace of action by this government, ministers will on Monday lay out a series of proposals to make it easier for homeowners to jointly own the buildings they live in.

The commonhold white paper will form the basis of a draft leasehold reform bill later this year that is likely to include a ban on developers selling new flats under the controversial system.

Pennycook said: “If I had said to any leaseholder five, 10 years ago that in a single parliament the government is going to bring the system to an end, I think any of them would have said that is incredibly ambitious, incredibly radical.

“When we get it done, it will have lasting, generational impact in overhauling a system, which is a feudal right. Freehold was used in the Domesday Book, you know, the concept of leasing goes back to serfs being able to work a plot of land.

“This arrangement has been in place for centuries and is essentially, in some ways, unchanged. It’s land owned by someone else who grants the right of use of that land to another person. That is why it’s inherently unfair. That is why, in many ways, leaseholders are second-class homeowners – that’s what we’ve got to change.”

Pennycook is not the first minister to promise to abolish leasehold. Michael Gove, the previous housing secretary, also planned measures under the last government but his reforms were watered down after Downing Street intervened.

MPs are increasingly complaining about the behaviour of some freeholders and building managers, whom they accuse of levying fees for services that do not exist and failing to make repairs for which they have charged.

Leasehold reform campaigners hoped Labour’s election win would increase the pace of change, but some have been disappointed by how long it is taking to publish a draft bill and to enact some of the reforms that Gove passed.

Gove’s leasehold reform bill passed at the tail end of the last parliament after intense negotiations between him and No 10. Several elements of that bill have not been formally enacted, however, including introducing a formula to decide how much residents should pay to buy out their leases.

Some leasehold campaigners have accused the government of soft-pedalling their proposed reforms, but Pennycook blames the rushed nature of Gove’s bill for the delays.

Pennycook said: “A proposal to make it easier for leaseholders to manage their own properties, for example, was written in such a way that it could have allowed building owners a vote on whether that should happen.

“That serves as a warning to what happens if you’re going to rush things through and not ensure that the reforms are watertight.

“So we’re trying to balance doing things as fast as possible, but also ensuring that we get the get everything right so it’s to the lasting benefit of leaseholders.”

Monday’s white paper will include a number of suggestions to make it easier to run buildings under commonhold – a form of ownership that allows flat owners to own and manage their buildings jointly.

They include strict rules on how commonhold buildings can be run, designed to give confidence to mortgage lenders that they will not fall into disrepair. The plans will also allow commonholders to split their buildings into separate sections so that only those who benefit from certain amenities have to pay for and run them.

Pennycook said: “This wider set of reforms is necessary to bring the feudal resolving system to an end in its entirety.

“And by an end I mean … [that essentially] commonhold becomes the default tenure going forward, and we have a residual number of leasehold arrangements.”

He also acknowledged why some leaseholders felt so dismayed by the pace of change. “I understand entirely why leaseholders generally are frustrated,” he said.

“They have sort of consultation fatigue. We want to see these things enacted quickly, because lots of them are suffering the hands of, in many cases, unscrupulous freeholders.”