As the government presses ahead with plans to ban new leasehold flats through the introduction of commonhold, many in the property industry are sounding the alarm. While the intention to protect homeowners from poor practice is laudable, the unintended consequences of an outright ban on leasehold flats could be profound, creating a divided and unstable housing market for decades to come.
The government’s argument is that leasehold is too often abused. Ground rents, opaque service charges and restrictive covenants have damaged the reputation of a trusted tenure system. But the proposed “ban” on new leasehold flats risks throwing the baby out with the bathwater. For centuries, leasehold ownership has provided a clear and workable legal framework for multi-occupancy buildings, especially where shared structure, maintenance and insurance obligations are complex. Flats, by their very nature, require communal management.
The freehold structure, which some reformers champion as a universal solution, is often impractical when a building has dozens or even hundreds of individual owners. The freeholder (or head lessor) plays a crucial coordinating role — ensuring buildings are insured, maintained, and compliant with fire and safety regulations. Without that layer of responsibility and accountability, the risk of neglect, dispute, and legal paralysis increases sharply.
If leasehold tenure is banned for new flats, the only, current, viable alternative will be commonhold – a model that, despite being introduced in 2002, has failed to gain meaningful traction. Developers, lenders, and managing agents remain wary of commonhold’s limitations: its lack of flexibility, the absence of a single controlling entity and the potential for disputes to escalate quickly in the absence of a freeholder with legal authority.
Commonhold reform is on the government’s agenda, but practical implementation lags far behind the political rhetoric. The danger is that we could end up with a “two-tier” market: older flats held on tried-and-tested leasehold structures, and new flats sold as commonhold under untested, inconsistent and lender-cautious frameworks.
Purchasers, mortgage providers, and even conveyancers may view commonhold units as riskier or less saleable, pushing prices down relative to traditional leasehold flats. This would distort the market and undermine confidence at a time when the housing sector needs stability more than ever.
There’s also the issue of management quality. Professional freeholders, whether individuals, housing associations, or specialist asset managers, play a vital role in safeguarding long-term building standards. Removing them from the equation entirely leaves governance in the hands of residents, who may lack the expertise, time, or willingness to act collectively. Scrivener Tibbatts’ experience of helping Right to Manage groups shows that self-management is often much more time consuming than anyone anticipated and can easily break down, especially where owners disagree over spending priorities.
A more balanced reform would be to retain leasehold for flats but under stricter regulation. Transparent service charges, caps on ground rents, and easier rights for leaseholders to take over management or extend leases. Although I would argue leaseholders already have the right to manage and the framework to extend their leases under the 1993 Act. this would go some way to address the genuine abuses without dismantling the system altogether.
The government’s goal should be fairness, not dogma. Leasehold, properly regulated, remains an efficient and proven structure for complex residential buildings. Banning it entirely could do far more harm than good – creating uncertainty, stifling development, and ultimately dividing the flat market into two unequal halves. The lesson from history is that reform systems that fail, but don’t destroy the ones that work, and leasehold is one that works.
Clive Scrivener is a partner at Scrivener Tibbatts and a member of ALEP (Association of Leasehold Enfranchisement Practitioners)
