The housing minister has plans to end the 'feudal' leasehold system in England and Wales in a bid to give homeowners greater control over their properties.
The changes will affect around five million leasehold homes.
Housing Minister Matthew Pennycook announced that new leasehold flats will be banned, with commonhold becoming the default tenure.
The reforms mark "the beginning of the end" for a system that subjects homeowners to "unfair practices and unreasonable costs," according to the minister.
The changes will affect around five million leasehold homes across England and Wales after years of complaints from leaseholders about crippling service charges and crumbling buildings.
Under the new proposals, commonhold will be "reinvigorated" through a new legal framework, ensuring homeowners - not third-party landlords - own the buildings they live in.
Pennycook said: "By taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners who have a greater say in how their home is managed and the bills they pay."
The Government wants to move to a system more in line with the rest of the world, where homeowners own a share of and have control over their buildings.
Under the current leasehold system, third-party landlords own a building's lease and make decisions on behalf of homeowners. Leaseholders often feel they have no control over costs for repairs and maintenance. They are also subject to additional costs such as ground rent.
Service charges have risen by 11 per cent in England and Wales between 2023 and 2024 to an average of £2,300, according to property company Hamptons.
With some leaseholders complaining about the slow pace of action by this Government, a Commonhold White Paper published on Monday will outline the plans to prohibit the sale of new leasehold flats.
A draft Leasehold and Commonhold Reform Bill, which will include details of how the reformed commonhold system will work, will be published later this year.
Pennycook said: "If I had said to any leaseholder five, 10 years ago that in a single parliament the government is going to bring the system to an end, I think any of them would have said that is incredibly ambitious, incredibly radical.
"When we get it done, it will have lasting, generational impact in overhauling a system, which is a feudal right."
The Ministry of Housing, Communities and Local Government confirmed the legislation will apply to England and Wales. The Government has also stated it is "determined" to make conversion to commonhold easier for existing leaseholders.
Pennycook is not the first minister to promise to abolish leasehold. Michael Gove, the previous Housing Secretary, also planned measures under the last Government but his reforms were watered down after Downing Street intervened.
MPs are increasingly complaining about the behaviour of some freeholders and building managers, whom they accuse of levying fees for services that do not exist and failing to make repairs for which they have charged.
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Several leaseholders have shared their struggles with rising service charges.
Kasia Tarker from West London saw her monthly service charge triple from £65 to over £200 in just three years. "I am going have to try and sell the flat or become homeless," she told the BBC.
Jean Hopkin in Sheffield reported a 356 per cent increase in service charges, making her flat unsellable. While Jenny Baker from Southampton now pays £7,200 annually in service charges while complaining about poor maintenance.
"I feel stuck – I can never come out of it," she said.
Under commonhold, homeowners own their property outright, similar to freehold houses. Commonhold residents have a say on the annual budget for their building, unlike leaseholders who receive bills from freeholders.
Commonhold properties have no ground rent charges, and residents have the will to hire and fire managing agents. Additionally, forfeiture is not an option, meaning homeowners are protected from the threat of losing their home
This system gives residents more autonomy over what they pay and who they appoint for maintenance.
Monday's white paper will propose measures to simplify the management of buildings under commonhold, a system where flat owners jointly own and manage their buildings.
It will include strict rules to ensure buildings are well-maintained, giving confidence to mortgage lenders. The plans will also allow common holders to divide buildings into sections, with only those benefiting from specific amenities responsible for their costs and management.
Pennycook concluded that the proposed reforms aim to completely end the feudal leasehold system, making commonhold the default form of ownership, with only a few leasehold arrangements remaining.
He acknowledged leaseholders' frustration with the slow pace of change, noting their "consultation fatigue" and the suffering caused by unscrupulous freeholders. He emphasized the need for swift action to address these issues.
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The changes will affect around five million leasehold homes.
Housing Minister Matthew Pennycook announced that new leasehold flats will be banned, with commonhold becoming the default tenure.
The reforms mark "the beginning of the end" for a system that subjects homeowners to "unfair practices and unreasonable costs," according to the minister.
The changes will affect around five million leasehold homes across England and Wales after years of complaints from leaseholders about crippling service charges and crumbling buildings.
Under the new proposals, commonhold will be "reinvigorated" through a new legal framework, ensuring homeowners - not third-party landlords - own the buildings they live in.
Pennycook said: "By taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners who have a greater say in how their home is managed and the bills they pay."
The Government wants to move to a system more in line with the rest of the world, where homeowners own a share of and have control over their buildings.
Under the current leasehold system, third-party landlords own a building's lease and make decisions on behalf of homeowners. Leaseholders often feel they have no control over costs for repairs and maintenance. They are also subject to additional costs such as ground rent.
Service charges have risen by 11 per cent in England and Wales between 2023 and 2024 to an average of £2,300, according to property company Hamptons.
With some leaseholders complaining about the slow pace of action by this Government, a Commonhold White Paper published on Monday will outline the plans to prohibit the sale of new leasehold flats.
A draft Leasehold and Commonhold Reform Bill, which will include details of how the reformed commonhold system will work, will be published later this year.
Pennycook said: "If I had said to any leaseholder five, 10 years ago that in a single parliament the government is going to bring the system to an end, I think any of them would have said that is incredibly ambitious, incredibly radical.
"When we get it done, it will have lasting, generational impact in overhauling a system, which is a feudal right."
The Ministry of Housing, Communities and Local Government confirmed the legislation will apply to England and Wales. The Government has also stated it is "determined" to make conversion to commonhold easier for existing leaseholders.
Pennycook is not the first minister to promise to abolish leasehold. Michael Gove, the previous Housing Secretary, also planned measures under the last Government but his reforms were watered down after Downing Street intervened.
MPs are increasingly complaining about the behaviour of some freeholders and building managers, whom they accuse of levying fees for services that do not exist and failing to make repairs for which they have charged.
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Several leaseholders have shared their struggles with rising service charges.
Kasia Tarker from West London saw her monthly service charge triple from £65 to over £200 in just three years. "I am going have to try and sell the flat or become homeless," she told the BBC.
Jean Hopkin in Sheffield reported a 356 per cent increase in service charges, making her flat unsellable. While Jenny Baker from Southampton now pays £7,200 annually in service charges while complaining about poor maintenance.
"I feel stuck – I can never come out of it," she said.
Under commonhold, homeowners own their property outright, similar to freehold houses. Commonhold residents have a say on the annual budget for their building, unlike leaseholders who receive bills from freeholders.
Commonhold properties have no ground rent charges, and residents have the will to hire and fire managing agents. Additionally, forfeiture is not an option, meaning homeowners are protected from the threat of losing their home
This system gives residents more autonomy over what they pay and who they appoint for maintenance.
Monday's white paper will propose measures to simplify the management of buildings under commonhold, a system where flat owners jointly own and manage their buildings.
It will include strict rules to ensure buildings are well-maintained, giving confidence to mortgage lenders. The plans will also allow common holders to divide buildings into sections, with only those benefiting from specific amenities responsible for their costs and management.
Pennycook concluded that the proposed reforms aim to completely end the feudal leasehold system, making commonhold the default form of ownership, with only a few leasehold arrangements remaining.
He acknowledged leaseholders' frustration with the slow pace of change, noting their "consultation fatigue" and the suffering caused by unscrupulous freeholders. He emphasized the need for swift action to address these issues.
Find Out More...