Residential leasehold and commonhold

The problem

In England and Wales, properties can either be owned as freehold or as leasehold. Leasehold is a form of ownership where a person owns a property for a set number of years (typically, 99 or 125 years) on a lease from a landlord, who owns the freehold.

Flats are almost always owned on a leasehold basis, but in recent years it has also increasingly been used for newly built houses.

It is estimated that there are at least 4 million leasehold properties in England alone. However, we have been told that the law which applies to leasehold is far from satisfactory.

The UK Government has said that leasehold has “far too many problems including disproportionate costs to extend leases; poor value property management; and a slow and costly sales process”. The Welsh Government has also noted “widespread criticism of poor practice in the use of leasehold”.

Respondents to the consultation on our 13th Programme of Law Reform also identified numerous problems with residential leasehold law.

We have therefore been tasked with improving consumer choice, and with providing greater fairness and transparency for leaseholders.

The project

Our project currently addresses three issues:

  • leasehold enfranchisement
  • the right to manage
  • commonhold, which provides an alternative form of ownership to residential leasehold.

For further information about our work on these issues, please see the sub-project pages.

The terms of reference, agreed with the Ministry for Housing, Communities and Local Government and with the Welsh Government, are available.These terms of reference were updated in September 2018 to reflect the Ministry’s policy on enfranchisement and shared ownership.

Our project complements the ongoing work of the Ministry of Housing, Communities and Local Government and the Welsh Government. The Ministry has published its response to its own consultation on “Tackling Unfair Practices in the Leasehold Market” in December 2017, and a consultation on “Implementing reforms to the leasehold system” in October 2018.

Our Consultation Paper on leasehold enfranchisement reform (“Leasehold home ownership: buying your freehold or extending your lease”) has now been published. The consultation period closes on 07 January 2018. To read the Consultation Paper, or submit a consultation response, please see the leasehold enfranchisement page.

Our Consultation Paper on commonhold reform (“Reinvigorating commonhold: the alternative to leasehold ownership”) was published in December 2018. The consultation period closes on 10 March 2018. The read the Consultation Paper, or submit a consultation response, please see the commonhold page.

Our evidence to the Housing, Communities and Local Government Select Committee’s leasehold reform inquiry is available here.

Contact

By email to:   propertyandtrust@lawcommission.gov.uk

Project details

Area of law

Property, family and trust law

Commissioner

Professor Nicholas Hopkins