In the final instalment of our leasehold series from ALEP, lease extension and enfranchisement specialist Shabnam Ali-Khan explores the changes that are necessary for meaningful reform to the leasehold system.
It is widely accepted that the leasehold system is in need of reform, and that the current leasehold system is flawed in many ways.
The 2024 Leasehold and Freehold Reform Act (LAFRA), enacted hastily by the previous government as if it had run out of steam, was heralded as significant step towards fairer ownership structures, introducing provisions to reduce lease extension and freehold purchase premiums for leases below 80 years, improve transparency on service charges and accounts and allow more buildings to qualify for the Right to Manage (RTM).
However, save for the RTM changes, most provisions are yet to come into force and could still change as secondary legislation and the recently published Draft Commonhold and Leasehold Reform Bill take shape. What the sector does not need is another round of rushed or politically motivated reform. The uncertainty caused by half-implemented legislation has already disrupted the market, affecting leaseholders, freeholders, developers, lenders and managing agents alike. As a practitioner, it is frustrating to witness how this has played out thus far, particularly as reforms have been discussed for many years.
The value of stability
A fifth (20%) of all homes in England and more than half of those in London are currently leasehold – not only private apartment buildings but also shared ownership schemes, retirement developments and various mixed-use schemes. Far from being an outdated anomaly (as it is sometimes described), leasehold remains a mainstream tenure that has enabled millions of homes to be owned and financed safely.
For all its flaws, the system does incorporate some powerful rights for leaseholders. It allows qualifying leaseholders to enfranchise or take over management through established no-fault processes. These mechanisms give lenders and leaseholders confidence, define responsibilities for maintenance and ensure that complex, multi-occupancy buildings can function safely. That framework may need refining, but it does not necessarily need replacing. Reforming leasehold requires careful drafting and proper consultation – not sweeping change driven by political deadlines.
Lessons from LAFRA
The introduction of the LAFRA exemplifies the tension between ambition and practicality. Its principles were well-intentioned, but implementation has been slow and messy, leaving the profession operating in a state of limbo. As we await crucial secondary legislation, advising clients has become more complex.
The landscape is complex enough and introducing another layer of reform before the 2024 Act is fully understood and embedded would only increase confusion. For conveyancers in particular, the absence of clarity risks inconsistent advice, longer transactions and heightened liability. The next phase must prioritise consolidation, guidance and consistency over further upheaval.
Commonhold’s promise and pitfalls
Commonhold, the government’s preferred long-term alternative to leasehold, offers an appealing vision of collective ownership. Many practitioners – including ALEP members – support its potential and agree that it deserves wider exploration. Yet it is not, at least for now, a ready-made solution.
Commonhold requires extensive legal, financial and cultural adaptation. Mortgage lenders remain cautious, developers see limited commercial incentive, and managing agents are more familiar with the leasehold model. Without addressing these issues first, a forced transition could choke housing delivery and introduce new layers of risk into the market.
So reform should be evolutionary, not revolutionary. Commonhold must be tested on a manageable scale, with robust lender guidance, clear accounting structures and phased adoption. Only then can it succeed as a viable tenure alongside a modernised leasehold system.
Collaboration over confrontation
For change to be successful, the government must work with legal professionals, surveyors, lenders and leaseholders to create reforms that are fair, functional and future-proof. Organisations such as ALEP, which brings together practitioners spanning valuation, litigation and conveyancing, are well placed to assist policymakers in translating ambition into workable law.
Too often, leasehold reform has been framed as a battle between leaseholders and freeholders. This oversimplifies the issue and undermines confidence in the market which can create unnecessary anxiety and tension. Most ownership structures operate perfectly well when properly managed and transparently run. My belief is that policymakers should focus on fixing specific problems with leasehold, such as excessive service charges, poor communication and exploitative leases, rather than dismantling systems that already work. A ban on leasehold flats is one thing, but to promise abolishing leasehold all together is dangerous and an empty promise. Feasibly, how would we dispose of all the current leases? It strikes me that commonhold would have to be so clear and straightforward with lenders and developers on board to even make a slight dent in the leasehold market in the near future. Any real change would be many, many years away.
Avoiding unintended consequences
The financial consequences of poorly managed reform are already visible. Media speculation, shifting political promises and regulatory uncertainty have affected buyer and lender confidence. Unclear valuation rules and proposals to cap ground rents are disrupting transactions, while the lack of a clear timetable for commonhold discourages developers from exploring it further.
Conveyancers are on the front line of this uncertainty, tasked with interpreting evolving legislation and advising anxious clients. The profession needs certainty and guidance.
Getting reform right
The objective of leasehold reform is widely shared: a simpler, fairer and more transparent system that works in practice as well as in principle. But that goal will only be achieved through measured implementation, proper education and open dialogue between government and professionals.
At ALEP’s annual conference in October, the message from across the sector was clear: we require progress, but not at any cost. Reform done well can restore trust, strengthen the market and support the housing growth the government aspires to. But reform done badly could destabilise it for years.
In leasehold as in conveyancing, precision matters. The success of the next phase of reform will depend not on how quickly it is delivered, but on how collaboratively it is delivered.
About the author
Shabnam Ali-Khan is a partner at Russell-Cooke and member ALEP. She specialises in lease extension and enfranchisement matters, primarily under the Leasehold Reform Housing and Urban Development Act 1993 working with a variety of clients ranging from high-net-worth individuals and companies to individual leaseholders and investor landlords. Shabnam has carved out a niche in right of first refusal matters pursuant to the Landlord and Tenant Act 1987. Shabnam advises on a wide range of other landlord and tenant matters including advising residents’ freehold and management companies on various issues including block management, service charges and consultation requirements and rights for major works as well the Right to Manage. She is also a qualified mediator.
