Complex Legal Hurdles Push Leasehold Ban Beyond Current Parliament
Matthew Pennycook, the housing minister, confirmed the ban on new leasehold properties will most likely not take effect until after the next general election. While legislation to dismantle the centuries-old leasehold system and introduce a modern commonhold model will pass before then, activating the ban requires navigating significant legal and practical complexities.
“It’s highly likely that we won’t switch on the ban during this parliament,” Pennycook told journalists following a speech reaffirming his party’s commitment to ending the feudal leasehold system.
The minister emphasized the government’s goal to eradicate leasehold tenure by the end of this parliamentary term, describing it as “nothing short of the dismantling and emancipation of leaseholders.” However, he warned that an immediate, blanket ban on new leaseholds is unattainable due to the intricate legal framework dating back to medieval times.
Leasehold Abolition Faces Legal and Market Challenges
Pennycook challenged critics, particularly the Greens and Zack Polanski’s party, accusing them of oversimplifying the issue with “glib soundbites.” He explained that abolishing approximately five million existing leases in England and Wales overnight would be unlawful and unworkable.
“How could the mortgage market absorb such a shock? How would the Land Registry manage to replace millions of leasehold and freehold titles with commonholds overnight? These questions remain unanswered by those demanding immediate abolition,” Pennycook stated.
The Historic Impact of Leasehold Reform
Leasehold ownership grants residents the right to occupy a property for a set period, but crucially, they do not own the land beneath it. This system, almost exclusive to England and Wales, has long frustrated homeowners facing soaring service charges and ground rents imposed by freeholders—fees that often hinder property sales and provide no direct service in return.
In contrast, many countries employ a commonhold model where flat owners jointly own and manage their buildings, eliminating these issues.
Describing the reform as the “biggest shakeup in homeownership for 1,000 years,” Pennycook outlined the government’s timeline. The priority is to enact all primary legislation necessary to end leasehold during this parliament, paving the way for developers to voluntarily adopt commonhold schemes.
However, he noted that implementing the ban involves “complex trade-offs with housing supply and other critical factors,” underscoring the need for a carefully managed transition. The government plans to announce a commencement date within this parliamentary session that will apply simultaneously to leasehold flats and houses.
Legislative Progress and Ongoing Challenges
The ban on new leasehold houses already passed under the Conservative-led Leasehold and Freehold Reform Act 2024, fast-tracked during the parliamentary “wash-up” period after Prime Minister Rishi Sunak called an early election. Meanwhile, most leasehold properties are flats, and their ban is addressed in Labour’s Draft Commonhold and Leasehold Reform Bill introduced in January.
This bill also proposes capping ground rents at £250 annually and outlines pathways for existing leaseholders to transition to commonhold if they choose.
Although the 2024 Act includes interim measures to make leasehold fairer, many reforms remain unimplemented. Pennycook attributed delays to flaws in the previous government’s legislation that require correction.
Leaseholders Demand Swift Action Amid Growing Frustration
While campaigners like the National Leasehold Campaign (NLC) praised Pennycook’s candor, they emphasized that leaseholders have “run out of patience.”
Harry Scoffin, founder of Free Leaseholders, voiced frustration at the minister’s explanations: “Listening to the minister’s list of excuses about complexity and powerlessness, one might forget that this Labour government commands the second-largest majority in its 126-year history.”
