In January 2022, the UK Government launched a consultation on reforming the leasehold and commonhold systems in England and Wales, seeking views on the Law Commission recommendations made in July 2020.
The Leasehold Reform (Ground Rent) Act 2022, which abolished ground rents in the majority of new residential long leases, came into force on 30 June 2022, marking the “phase one” of the leasehold reform programme.
Aside from the ban on ground rents, there has been no clear statement from the Government on its timeline for leasehold reform or a formal response to the Law Commission’s detailed proposals.
A recent House of Commons debate on leasehold and freehold reform which took place in January 2023, confirmed that the Government is committed to deliver phase two of the leasehold reform programme.
Leasehold and commonhold reform remain on the Government’s agenda and developments are expected within this Parliament.
The Secretary of State at the Ministry of Housing, Communities and Local Government has recently confirmed that the Government wants to introduce legislation later this year to change the leasehold system. It has been suggested that the Government may remove the leasehold structure entirely, but there has been no mention of any alternative structure for the ownership of residential flats.
Commonhold has been in existence in England and Wales since 2004, but has not seen a significant take-up. The Law Commission recommended a greater move to commonhold as the alternative to the leasehold system, but there are a number of legal complexities that need to be considered.
The Government intends to make changes to the Enfranchisement, Right to Manage and Lease Extension procedures, including reducing the premiums payable for lease extensions under the Leasehold Reform, Housing and Urban Development Act 1993. However, the Government’s timeline for these changes has not been yet announced, and the legislation which the Government intends to introduce is still awaited.