Housing minister rejects calls for immediate leasehold abolition

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Housing minister rejects calls for immediate leasehold abolition

The housing minister claims the government will not “immediately abolish leasehold overnight”.

In a speech at the Institute for Government think tank, Matthew Pennycook criticised those calling for outright abolition, questioning how the mortgage market would be affected.

The National Leasehold Campaign has called for reform, saying “justice delayed is justice denied, and that is exactly how leaseholders now experience this system”.

Not promising to abolish leasehold outright

Mr Pennycook said in his speech: “In making that manifesto commitment to bring the leasehold system to an end, we were not promising to immediately abolish leasehold outright.

“If outright abolition had been our intention, we would have stood on a manifesto that promised as much.

“We did not do so, and for good reason, because anyone, with even the most rudimentary knowledge of leasehold, knows that the outright and immediate abolition of circa five million English and Welsh leases is almost certainly impossible.

“Those advocating for such an approach cannot answer how it would be lawful; how the impact on the mortgage market would be managed; how it would even be feasible for the land registry to delete millions of leasehold and freehold titles and replace them with commonhold ones overnight; how millions of commonhold associations could instantly be established with hundreds of thousands of directors corralled into overseeing them; or what the consequences would be for buildings that have already enfranchised or exercised the Right to Manage.

“They can’t answer these questions because abolishing leasehold outright is a glib soundbite rather than a serious policy proposition.”

Make commonhold the default tenure

Mr Pennycook added instead the government wants to end the feudal leasehold system by making commonhold the default tenure.

He said: “To stop the renewal of the leasehold system, we are legislating to make commonhold the default tenure.

“Commonhold is a modern homeownership structure that is used widely around the world.

“It is not merely an alternative to leasehold ownership, but a radical improvement on it.

“At the heart of the commonhold model is a simple principle: the people who should own buildings, and who should exercise control over their management, shared facilities and related costs are not third-party landlords but the people who live in flats within them and who have a direct stake in their upkeep. Commonhold ensures that the interests of homeowners are preserved in perpetuity.”

Industry reaction to Mr Pennycook’s speech

The National Leasehold campaign said they understood leasehold could not be abolished overnight, but the government must do more to protect leaseholders.

The campaign said: “We are realistic. We know that leasehold cannot be abolished overnight. But leaseholders have run out of patience, and they are entitled to. After years of promises, consultations and repeated commitments, words alone are now meaningless without visible, concrete progress. Justice delayed is justice denied, and that is exactly how leaseholders now experience this system.

The campaign adds: “What the Minister has confirmed is that he will not be deterred by complexity. He has been honest about the challenges, realistic about what can be achieved, and clear about the direction of travel towards finally ending the feudal leasehold system. That clarity matters.

“However, for existing leaseholders facing escalating costs, insecurity and daily stress, intent must rapidly turn into outcomes.

“Millions have waited far too long for meaningful change. Many are losing faith that reform will ever arrive. The Minister has confirmed a determination to provide existing leaseholders with genuine escape routes, and those commitments must now be delivered in legislation, not postponed yet again. Every further delay compounds the injustice.”

Support government ambition

Chief executive officer at The Property Institute (TPI), Andrew Bulmer, welcomed the government’s commitment to mandatory qualification.

He said: “TPI supports the government’s clear ambition to reinvigorate commonhold and reform leasehold, empowering residents to take control of their own affairs and bills.

“If there are more residents running their own buildings, however, there is a greater need for competent, qualified professional property managers to support them. Whilst many managing agents do a good job, the lack of any regulatory oversight or enforcement means that bad actors and bad behaviours exist, and we must raise the bar of professional standards.

“The government’s commitment to mandatory qualifications is very welcome, and vital to raise standards. We encourage the minister to go further and introduce regulation of property managers, to improve trust and confidence in flat ownership, which is vital for boosting housing delivery.”

Service chargers can have a negative impact

Elsewhere in his speech, Mr Pennycook said service charges can have a negative impact on leaseholders.

When asked by Inside Housing Magazine whether a regulator should oversee the planned reforms, he said he understood why some leaseholders favour stronger measures such as caps, but argued they could do more harm than good.

He told Inside Housing: “We don’t think things like caps will work. I’ll give you an example of why. If you’re in a building that’s enfranchised, you’ve taken control. You might need to do your roof at some point and you might need to raise money beyond a cap to do the roof. That’s a choice.

“The point is, service charges have to be reasonable and we’ve got to allow people the means to challenge when they’re not.

“At the moment, the fact that you can get hit for litigation costs, the fact that you can’t often see what your service charge means, there’s no standardised form. It’s not transparent.

“People just don’t feel confident enough to go to the tribunal. So that’s the thrust of the reforms. But we’re not looking at caps or anything cruder. I think they’ll end up having a detrimental impact on leaseholders, particularly for those who’ve taken control.”

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