Reforming Leasehold and Commonhold Systems

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We welcome the Press Release from the Government for reforming leasehold, published 11 January 2022 announcing “More leaseholders to own their own buildings under government proposals”. The announcement suggests further proposals which seek to make it easier and cheaper for leaseholders to buy the freehold of their building under radical government proposals to create a fairer housing system:-

https://www.gov.uk/government/news/more-leaseholders-to-own-their-own-buildings-under-government-proposals

Following the Press Release a consultation was opened by the Department for Levelling Up, Housing and Communities to gain insight from homeowners and the housing industry due to be affected by such proposals before final decisions are made.

The Open Consultation (closes 23:45 on 22 February 2022):-

https://www.gov.uk/government/consultations/reforming-the-leasehold-and-commonhold-systems-in-england-and-wales

The Press Release suggested the following reforms:-

• Allowing leaseholders of buildings which have up to 50% of commercial space to make a collective enfranchisement or right to manage claim (the right to claim currently only applies to buildings which have up to 25% commercial space). The intention of this proposed reform is:-
• • To give more leaseholders the ability to manage or own the freehold of their properties
  • Broaden access to enfranchisement (buying the freehold) and the ‘right to manage’ a building.
  • to enable them to have more control over how shared facilities are run and have the final say on building maintenance costs.
• Making it cheaper for leaseholders to collectively buy their freehold by way of a ‘mandatory leaseback’. This requires landlords to keep a lease on some properties in the building (for example, commercial units). This means reducing the cost of a collective buyout of their building – making it a reality for thousands more leaseholders.
• Allowing leaseholders to require that a landlord take on leases for any non-participating units following a collective enfranchisement; the introduction of a non-residential limit for individual freehold acquisitions (for example, if a leaseholder wanted to buy the freehold of their flat which is above a shop unit); and changes to voting rights in right to manage companies.

Greater use of commonhold, as an alternative form of homeownership to leasehold – including for those in Shared Ownership schemes in England. The commonhold model is used in countries across the world and provides a structure for homeowners to collectively own the building their flat is in from the outset – with a greater say on their building’s management, shared facilities and related costs.