Specialist Leasehold solicitor, Lauren Madams, takes a look at the recent announcement regarding issues affecting leasehold reform in 2023, and the particular question of will leasehold be abolished?
Following earlier announcements by the Housing Secretary Michael Gove, pledging to ‘scrap’ the leasehold system in England and Wales later this year, many thought this marked the end for the centuries old way of owning property. However, it was announced yesterday, following a lengthy battle between the Housing Secretary and Number 10, that the leasehold system is safe for now and will not be abolished this year.
The Housing Secretary has long argued against the leasehold system and has made strong arguments for the system to be replaced by alternative ownership arrangements, one being ‘Commonhold'.
Commonhold is a system whereby flat owners would jointly own their buildings, and share responsibility for the running of the common parts, without the need for a lease formality between landlord and tenant - similar to freehold ownership. This type of property ownership is not a new concept, having been introduced over twenty years ago, back in 2002, but since such time there has been very little uptake, due to unclear legislation and what have been considered near impractical processes. Subsequently, we cannot expect this change to happen overnight, as lengthy consultation will be needed to ensure the Commonhold legislation is workable.
Drawing a line under Gove’s calls for the abolishment of leasehold, the Government has continued to listen to demands for the leasehold system to be reformed, with the Department for Levelling Up Housing and Communities indicating that they “will bring forward further leasehold reforms later in this parliament”. Such reforms are hoped to reduce costs for leaseholders, including putting a cap on ground rents, making the lease extension process cheaper and easier, and giving leaseholders more control over the management of their buildings - this will follow on from the Leasehold Reform (Ground Rent) Act 2022 whereby ground rent reforms were introduced.
What does this mean for leaseholders? As things stand, it appears there will be no immediate end to the leasehold system any time soon, and it is certainly not something that can be achieved in a short space of time, given how established the system is. What we can expect are further reforms to be announced by the Government, in favour of making the leasehold system a fairer process for leaseholders, and signalling the beginning of change, which many have been calling for.
Our specialist team of Leasehold solicitors are able to give leasehold advice on all aspects of leases including lease extensions.
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