by Sam Akbay
The End of Leasehold for Flats: A Landmark Reform in UK Property Ownership
The UK Government has set in motion a transformative shift in property ownership, aiming to abolish leasehold for flats and establish commonhold as the new standard tenure in England and Wales. This move follows the earlier abolition of leasehold for new houses under the Leasehold and Freehold Act, which received Royal Assent in May 2024. Now, further legislative changes are set to reshape the landscape for millions of property owners.
What Does This Mean for Flat Owners?
Currently, over 70% of leasehold homes in England are flats—amounting to approximately 4.8 million properties, or 19% of the country’s housing stock. In Wales, leasehold properties represent around 16% of the market. With the upcoming ban on new leasehold flats, homeowners will instead hold their properties under a commonhold system, eliminating ground rents and the complications associated with traditional leasehold arrangements.
The Move to Commonhold: A New Era of Ownership
Under the proposed reforms, all new flats will be sold as commonhold rather than leasehold. This means that individual homeowners will own their flats outright while also having collective ownership and management of the building. A commonhold association—comprised of the flat owners—will oversee maintenance and governance, either directly or through a managing agent accountable to the residents rather than a freeholder.
The Law Commission has long championed this model, highlighting the inefficiencies of the existing leasehold system in its 2020 report, Reinvigorating Commonhold: The Alternative to Leasehold Ownership. Despite its introduction in 2002, commonhold has struggled to gain traction, but this new legislation aims to change that by making it the default system for new flats.
What Are the Implications for Property Professionals?
For estate agents, understanding the nuances of commonhold ownership will be crucial. Unlike leasehold, commonhold eliminates many of the complexities tied to service charges, lease extensions, and escalating ground rents. Agents will need to be well-versed in this new system to properly advise clients on its benefits and responsibilities.
Managing agents, too, will see a shift in their role. With residents taking collective control of their buildings, external management services may become less prevalent, altering the way property management functions in the long term.
Ongoing Campaigns for Leasehold Reform
The push for leasehold reform has been ongoing for years, with organizations like Propertymark playing a key role. Their advocacy contributed to the Leasehold Reform (Ground Rent) Act in 2022, which put an end to most new long-term ground rents. They have also worked alongside the National Leasehold Campaign to address unfair leasehold practices in newly built homes.
The abolition of leasehold for flats marks a significant step towards a fairer property market. However, public awareness of commonhold remains relatively low, and ensuring a smooth transition will require clear guidance and education for buyers, sellers, and industry professionals alike.
Looking Ahead
While the full details of the Leasehold and Commonhold Reform Bill are yet to be published, it is clear that the changes will reshape the future of flat ownership in England and Wales. For buyers, commonhold offers a simpler, fairer system free from many of the challenges of leasehold. For property professionals, adapting to this new landscape will be essential in providing expert guidance in an evolving market.
At Sam Akbay Property Agency, we are committed to staying at the forefront of these changes, ensuring our clients navigate the evolving property market with confidence. Whether you’re buying, selling, or investing, our expertise will help you understand how these reforms impact you and your property decisions.
