Beginning of the end for Leaseholds in the UK

The Ministry of Housing, Communities and Local Government announced at the beginning of March that they are now making serious strides towards ending the “feudal” system of leaseholds in the UK.

It is widely recognised that the leasehold system is archaic and can be unfair for leaseholders, but what will replace it and how will this work in practice for homeowners and landlords alike?

What’s next

By the later half of 2025, it is expected that the government will have pushed through their plans to ban all new leasehold flats, replacing them with Commonholds, a system of ownership which is the default tenure in much of Europe and across the world.

They claim that commonhold ownership is a radical improvement on leaseholds and that it will give homeowners a stake in the ownership of their buildings and hand them more power, control and security over their homes.

What are the pros

According to the gov.uk website, the reinvigoration of the Commonhold system will mean that:

“Homeowners will have a stake in the ownership of their buildings from day one, not have to pay ground rent, and will gain control over how their buildings are run under major plans to bring the feudal leasehold system to an end”.

The benefits for homeowners are clear, giving them more control and say over the budget for maintenance and upkeep of their buildings and removing the threat of forfeiture from the building owner as a means of compliance with a lease agreement.

When will we see change

At this point there is some uncertainty over how this will apply to existing leaseholds or what will happen when a lease expires under the new rules.

It is clear that these reforms need to be clarified to avoid further disruption to a market which is already reeling from the Renter’s Rights Bill – which looks likely to come into force by the Summer of 2025 – to avoid further uncertainty and ambiguity for landlords.

We’ll keep you posted on any developments as they come down the pipeline, so keep your eyes peeled for more information from Coapt as it becomes available.

Wanting to know more about the renters rights bill? Have a quick read of our overview here: Renter’s Rights Bill Key Info: What It Means For You