Property sector reacts to draft Commonhold and Leasehold Reform Bill

The government released its draft Commonhold and Leasehold Reform Bill last week, and the property industry has shared some very mixed reactions.

The government said the bill is a “game-changing shake up” of the leasehold system – but some housing market experts disagree. Yesterday, Today’s Conveyancer shared reactions from conveyancing bodies and leasehold campaigners. While they broadly agreed the bill included long-overdue measures, many remained sceptical it would fundamentally alter the leasehold landscape.

Today, property lawyers, industry bodies and representatives of freeholders and residents share their very mixed feelings on what, if any, impact the bill will have.

Law Society of England and Wales president Mark Evans

“The government providing more clarity about its proposals for leasehold reform is a welcome step for the conveyancing market. There has been uncertainty for too long.

“We will carefully examine the provisions of the detailed Commonhold and Leasehold Reform Bill. We will also look to obtain member input to respond to the government consultation on Moving to Commonhold: banning leasehold for new flats.”

Residential Freehold Association

“The inclusion of a ground rent cap in the draft Leasehold and Commonhold Reform Bill represents a wholly unjustified interference with existing property rights which if enacted, would seriously damage investor confidence in the UK housing market and send a dangerous and unprecedented signal to the wider institutional investment sector.

“Property rights and contract law are fundamental drivers of domestic and global investor confidence in the UK. Instead of focusing on those reforms which address the issues that leaseholders care most about, the government’s draft bill will tear up long-established contracts and property rights, which are pillars of the UK’s investment reputation.”

Conveyancing Taskforce (CTF)

“The CTF welcomes the ambition to modernise tenure, but emphasises that these are initial, early observations only. Both documents require detailed study, and commonhold will only succeed if the framework is fully workable for property lawyers and genuinely acceptable to lenders, the public and investors.

“A tenure system intended to endure for generations requires careful drafting, extensive sector engagement, and clarity on practical implementation. Speed must not come atthe expense of legal certainty or public confidence… the government must avoid repeating the drafting mistakes of the Building Safety Act and must explain why such a transformative reform is being pushed forward at speed.”

Justin Herbert, managing director, Residential Management Group 

“At RMG, we support reform and believe residents should be in control of how their buildings are run, and that’s already happening across many of the schemes we manage… But while commonhold is well-intentioned, full control comes with full responsibility. We have seen the consequences of that first-hand, including a scheme where fire safety failures led to a building being closed for years and residents left homeless.

“There is a better answer, one we successfully have in place in many schemes already. A blended model which puts residents in charge of every key decision, while experienced managing agents retain responsibility for building safety and regulatory compliance. It empowers residents without loading them with unmanageable risk and stress in the place they should just be able to call home. That is what meaningful reform must deliver.”

Kate Stockdale, partner in the Residential Property team at Wilsons Solicitors:

“A cap on ground rents at £250 is likely to be welcomed by conveyancers, as it should remove one of the most persistent sources of delay and uncertainty in residential transactions. Many long leases contain opaque or aggressively escalating rent review clauses, which can be difficult for buyers, lenders and practitioners to interpret and often trigger additional enquiries or lender conditions. A clear cap would simplify due diligence and make it easier to advise on future liabilities.

“That said, the proposed move away from leasehold for new flats will not be friction-free. Practitioners will need to quickly familiarise themselves with the commonhold regime, and there is likely to be a period of disruption as the market adjusts. In the short term, that learning curve could introduce new complexities, even if the longer-term aim is a more transparent and efficient system.”

Caroline Wild, counsel (real estate disputes), Forsters

“The leasehold system has long been lambasted and so the reinvigoration of a more flexible tenure, such as commonhold is welcome.  That said, it may not be the silver bullet that leaseholders are hoping for. Commonhold is still a form of communal living and a lot of the challenges leaseholders face under the current system will persist under a new tenure.

“Key to the success of commonhold will be the upskilling of professionals such as conveyancers, managing agents and lenders so they understand the nuances of commonhold and perhaps more importantly, arming leaseholders with sufficient knowledge and ensuring expectations are managed, not only in relation to the rights that commonhold will afford but the responsibilities and limitations also.”

Gavin Walmsley, leasehold specialist, Irwin Mitchell

“This is one of the most significant shifts in the leasehold system in decades. The £250 cap followed by a peppercorn rate will have major implications for existing leases. Large freeholders and pension funds are highly likely to consider legal action, particularly around the question of compensation.

“The government signalled its intention to revive commonhold in last year’s white paper, yet progress has been slow and today’s reforms raise complex issues for lenders, freeholders and leaseholders. The draft bill will now move into pre-legislative scrutiny and subject to parliamentary timings, the ground rent cap could come it force late 2028. Further consultation and challenge is almost inevitable.”

Timothy Douglas, head of policy and campaigns, Propertymark

“Addressing ground rents for existing leaseholders is a key step towards a fairer leasehold system. It brings existing leaseholders on par with new leaseholders, and it tackles one of the largest barriers to selling leasehold properties.

“We also welcome steps to make it easier and cheaper to buy leasehold property and the ambition to transition towards commonhold, but agents and consumers will need clear guidance, education, and practical support to understand and navigate this change.

“A draft bill provides a vital opportunity for policymakers to work with the sector to get the reforms right before legislation is passed into law. It is vital that the changes come in as soon as possible to support property transactions and that the costs are reduced for consumers.”

Paula Higgins, chief executive, Homeowner’s Alliance

“We have consistently called for ground rents to be abolished and reduced to a peppercorn, because homeowners should not have to pay for the ground under the home they own. We are very pleased the government’s draft bill promises to cap ground rents to £250 and eventually peppercorn for leaseholders and put an end to the outrageous practise of escalating ground rents. But flat owners should be aware it is a proposal, not yet the law, and there are still significant hurdles to clear before these changes take effect. After years of delay, the financial sector and vested interests should now step aside and allow these reforms to go unchallenged. Time has been called on treating homeowners as a lucrative income stream.”

Gary Scott, property litigation partner, Spector Constant & Williams

“The UK Government’s newly announced cap on ground rents will, in practice, materially affect a relatively small minority of leaseholders, likely less than 25% of all those with a ground‑rent obligation… The cap therefore represents a targeted but meaningful intervention, resolving some of the most acute cases of ground‑rent exploitation and bringing relief to those who have been disproportionately affected by historic leasehold practices.”

Scott Goldstein, property litigation partner, Payne Hicks Beach

“Under the new lease enforcement scheme, landlords will no longer be able to end long residential leases unilaterally… As with the removal of no-fault evictions, the government says landlords will be protected by the courts. However, this offers little reassurance given court staff shortages and long delays. In practice, these reforms are unlikely to have much impact because changes made in 2002 already made it much harder for landlords to end residential leases, requiring a court or tribunal decision first. As a result, forfeiture is relatively rarely used in residential cases.”

Danny Pinder, director of policy, British Property Federation

“While we agree that rapidly escalating ground rents should be addressed, the proposed cap will interfere with investments made by pension funds and institutional investors over many years and undermine the government’s pursuit of investment in this country. The various documents published by the Government today make clear that these changes will have an impact on freeholders – the value of their assets and their ability to match index-linked pension liabilities – but that they intend to proceed, nonetheless. We have long been clear that adequate compensation must be provided to these entities as they have invested in good faith in order to meet their liabilities and continue to fund everyone’s pensions – today’s announcements is silent on that point.”

Amber Krishnan-Bird, leasehold lawyer, Osbornes Law

“At first glance, this bill is the leasehold revolution homeowners have been waiting decades for after years of misery under a broken system. Yet, dig a little deeper and it offers far less relief than many had hoped.

“For some these proposed changes will come as a huge relief but for others they do not go far enough… The government says the ground rent cap may not being enforced until 2028 at the earliest and gives no timeframe for the rest of the legislation. In the interim many leaseholders will still be left be left facing difficult decisions over extending leases that are running out.”

Martin Boyd, chair of the Leasehold Advisory Service (LEASE)

“This is a significant milestone for leaseholders and marks the beginning of the end for the leasehold system as we know it. The draft bill tackles some of the most damaging features of leasehold, including high and escalating ground rents and the threat of forfeiture, which has left some leaseholders at risk of losing their homes over relatively small debts.

“More fundamentally, the bill signals a decisive shift away from leasehold as the default form of home ownership. Moving towards commonhold, and making it easier for existing buildings to convert where leaseholders choose to do so, has the potential to give homeowners genuine control, security and long-term certainty over their homes. This draft legislation represents a significant step towards a fairer and more transparent system of home ownership.”