Leasehold ban 'unlikely to come into force' before next general election, housing minister says

It's "highly likely" the ban on new leasehold properties won't come into force until the next parliament, Matthew Pennycook has said.

The housing minister said legislation to abolish the feudal-era property system and transition to a commonhold model will be passed before the next election.

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But he said switching on the ban for both leasehold flats and houses "involves some really quite complex trade-offs", so the commencement date may come later.

"I'm not saying there's no chance, but I think it's highly likely that we don't switch on the ban in this parliament," Mr Pennycook said.

The minister was speaking to journalists after a speech in which he reaffirmed Labour's commitment to abolish leasehold, as promised in their 2024 general election manifesto.

Labour has been accused of dragging its feet on the pledge, with the Green Party claiming this amounts to an effective U-turn.

Mr Pennycook insisted in his speech: "The aim of this government, by the end of this parliament, is nothing short of its dismantling and the corresponding emancipation of leaseholders."

He argued that an immediate outright ban would be impossible given the legal complexities of outlawing a system that originated in medieval times, accusing Zack Polanski's party of "glib soundbites".

"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," Mr Pennycook said.

He said those advocating for this 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".

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

'Biggest shakeup in 1,000 years'

Under the leasehold system, homeowners own the right to live in their property for a given number of years but they don't own the land it is on.

Leaseholders have complained of spiralling services charges to keep up with the maintenance of their building, which they have no say or control over, as well as ground rents to their freeholder, which can cause barriers to selling and don't require a service in return.

The system is unique to England and Wales with most countries operating a commonhold model for communal buildings - where each flat owner owns part of the unit the home is in.

Speaking to media following his speech, Mr Pennycook said abolishing it is the biggest shakeup to homeownership for 1,000 years.

On the timeline, he said the government's priority is to have "all the primary legislation that we need to end leasehold in place" by the end of this parliament.

"The commonhold legal framework will be fixed, I think you'll see developers start to bring forward commonhold developments out of choice," he said.

"But switching on the ban involves some really quite complex trade-offs with housing supply and other issues."

He said a government consultation has looked at how to ensure a "smooth transition", and a commencement date would be named within this parliament which would apply to flats and houses at the same time.

Legislation to ban the sale of new leasehold houses has already been passed - in the Conservatives' 2024 Leasehold and Freehold Reform Act, which was rushed through parliament in the "wash up" period after Rishi Sunak's decision to call an early general election.

But most leasehold properties are flats and the legal framework to ban this is in Labour's Draft Commonhold and Leasehold Reform bill, which was introduced in January.

'Leaseholders have run out of patience'

This draft commonhold bill is the mechanism the government will use to cap ground rents at £250 a year - transitioning to a 0 peppercorn value over the next 40 years.

As well as banning leasehold, it will set out how existing leaseholders can transition.

Reforms to make the system fairer in the meantime are contained within the 2024 act, but many of these are also yet to be enacted, which Mr Pennycook has blamed on flaws in the previous government's legislation which need to be corrected.

Responding to today's speech, the National Leasehold Campaign (NLC) welcomed Mr Pennycook's "honesty and clarity" but said leaseholders had "run out of patience".

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