© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
In March the Government published a Commonhold White Paper: the first stage in its fulfilment of a manifesto promise to abolish leasehold. The Ministerial foreword to the white paper states, that ‘The government is determined to ensure that commonhold becomes the default tenure… commonhold is not merely an alternative to leasehold ownership, but a radical improvement on it’. By the autumn we anticipate the publication of a Leasehold and Commonhold Reform Bill which will put these proposals into draft legislation.
As the government has already stated its intention that all new properties will be sold as commonhold (where they would previously have been leasehold) and considering the fact that, despite opposition from other parties, the government has a substantial majority with which to push this pledge through, the change is expected to take effect this Parliament.
However, another key government pledge is that of significantly increasing housing delivery (alongside the development of energy and infrastructure). The government has committed to 1.5m homes being built within the same time frame, in what Keir Starmer himself has referred to an ‘almighty challenge': housebuilding levels are currently at a record low at just 153,900 in 2024 (Office for National Statistics figures).
The government’s ambitious housing target has not been exceeded since 1968, despite the best intentions of successive governments. And if it is to be met, this can only be achieved by new housing delivered at greater densities, particularly in urban areas. In towns and cities where land is scarce and infrastructure is already in place, flats are often the only viable option to meet local need; this is true too of land outside major conurbations which is often constrained by land use designations, such as the Green Belt.
So the question of whether new developments, comprising a large proportion of commonhold units, go ahead will depend in part on developers’ attitudes towards commonhold. It will also require there to be a viable and working system of commonhold.
To date, commonhold has not been well received among housebuilders. The primary concern is that commonhold is untested at scale in England and Wales. Fewer than 25 commonhold developments exist nationally and for developers, investors and mortgage lenders, that spells risk. As the government acknowledges there is much to be done with the current version of commonhold (what we have at the moment might be termed ‘commonhold light’).
Commonhold has been on the statute books since 2004, and yet one of the main reasons for lack of take up, has been a number of known issues with it. These issues are technical and cover a number of areas, including: dispute resolution, amendment to the constitutional documents and provisions relating to the termination of a commonhold, along with how control is handed over as a development is ‘built out.’
Leasehold (despite its imperfections, which we acknowledge) is something that developers understand. It has deep roots in property law, is underpinned by decades of precedent and is woven into standard development funding and sales models. Service charge structures, management companies, exit strategies – all are familiar territory. To roll out new homes at scale and at speed, housebuilders will need to work with a tenure that they understand.
By contrast, commonhold raises big questions. How will development finance be structured when there’s no freehold reversion to secure against? How will developers recoup upfront costs of amenities or manage complex phasing on multi-block schemes? What’s the mechanism for enforcing covenants in a mixed-use building?
The economy is rife with uncertainty, but the government cannot risk a slow-down in the property market. While developers don’t have the reassurance of economic stability, they require stability where stability can be sought. The concern is that until commonhold is more established, its unfamiliarity may lead some to pause or pivot away from building flats altogether.
The tension between leasehold reform and the growth agenda need not be irreconcilable – but it does require a thorough, considered and therefore possibly slower transition.
If commonhold is to succeed, it must be made workable in the real world of development finance and long-term asset management. That means addressing technical hurdles including phased buildouts, integrating commercial and residential elements, and ensuring mortgage lender confidence.
A more pragmatic alternative might be to allow leasehold for new flats in the short to medium term, but with strengthened protections for leaseholders – while undertaking pilots in the passage towards commonhold adoption.
In conclusion, if the route to delivering new becomes more legally complex and commercially uncertain, the market will respond cautiously. That could mean slower build-out rates, fewer starts on site, or exceptions being made for house, rather than flats, even if that’s at odds with wider planning strategy. There is a very real danger that, in seeking to fix the leasehold system, we risk destabilising an already fragile housing pipeline.
When taking on the challenge of leasehold reform, the government should bear in mind that the last attempt to popularise commonhold in 2002 failed partly because the framework didn’t reflect the needs of developers or the realities of the market. Without addressing those same structural issues today, the government risks repeating history – only this time, bearing in mind the extent of the housing crisis and the political capital invested in its resolution - with more at stake.
Mark Chick, ALEP director and Senior Partner at Bishop & Sewell LLP