Property experts have warned that Labour’s promise to finish the job of ending the “feudal” leasehold system could complicate leaseholders’ situation.

The draft Leasehold and Commonhold Reform Bill outlined in the King’s Speech pledges to reinvigorate commonhold through a comprehensive new legal framework and ban the sale of new leasehold flats so that commonhold becomes the default tenure in England and Wales.

It will also bolster leaseholders’ fundamental rights to extend their lease and buy their freehold, restrict the sale of new leasehold flats and regulate ground rents for existing leaseholders and end forfeiture so that they are protected against losing savings for potentially small unpaid debts.

Robert Poole (pictured), director at Glide Property Management, part of Leaders Romans Group, says although many of the Bill’s aims are welcome, transitioning to commonhold involves significant complexities and potential delays, because managing common areas through a residents’ association often leads to disagreements, making it challenging to take decisions for the building’s best interest.

Risk averse

“Lenders are more risk-averse to financing commonhold properties due to its unfamiliarity compared to leasehold, potentially impacting owners and developers, and contributing further to the housing crisis,” adds Poole.

The fact this is labelled as a draft bill – along with only three others among the 40 proposed pieces of legislation – suggests the new legislation won’t pass in this parliamentary session, so leaseholders could be left waiting for years to see the benefit, according to Linz Darlington, MD of lease extension firm Homehold (main image, inset).

The Leasehold and Freehold Reform Act, which just scraped through Parliament in May, included banning the sale of most new leasehold houses and an increase in the standard lease extension term to 990 years.

Darlington believes this draft Bill could easily become a distraction from getting the existing law implemented. “The government might see investing in the work required to put this into force is the equivalent to installing a new kitchen in a house that they fully intend to knock down in a few short years,” she adds.