The leasehold system is far from perfect, yet in the Government’s rush to replace it with commonhold, there’s a real danger of swapping one flawed structure for another, says Simon Gerrard, Chairman and Managing Director, Martyn Gerrard Estate Agents.

“Labour’s much anticipated Commonhold White Paper sets out the bold ambition to make commonhold the default form of flat ownership in England and Wales,” he says.

“It’s not a new concept – commonhold has been on the books since 2002 – but the fact there are fewer than 20 such developments in over two decades speaks volumes.

“The case for reform rests on a familiar grievance: leaseholders being stung by high service charges and opaque management structures. But much of this frustration overlooks the underlying reasons why costs have surged, including higher utility bills, staff wages, and most dramatically, building insurance premiums, which have jumped 87% since 2021.

A shift to commonhold won’t eliminate these costs.”

“A shift to commonhold won’t eliminate these costs. It will simply shift the burden of managing and collecting them onto homeowners themselves.

“Commonhold promises autonomy, Gerrard adds, but in practice it also means dealing with difficult neighbours, chasing unpaid contributions, and navigating legal disputes – all without the structure that leasehold currently provides.

Reluctant enforcers

“Alongside giving residents a voice, the reforms would also hand them responsibilities they may neither want nor be equipped to handle. Residents could find themselves acting as reluctant enforcers, embroiled in disputes with neighbours over bills and building upkeep.

“Then there’s the issue of uncertainty: how will the reforms be implemented? What will a ban on leasehold flats actually mean in practice? And how long will the transition take?

“These open questions create hesitation across the board — not just for homeowners, but for developers and lenders too. Without clear answers, investment is likely to stall and the delivery of new homes could slow, undermining the government’s vital efforts to tackle the housing crisis.”

Reform, of course, is necessary, Gerrard adds. “Creating a home ownership system that fairly balances the interests of all parties is important, but far from easy.

“Yet commonhold is no silver bullet. For all its ideals, it brings its own set of costs, conflicts and complexities. In trying to fix the leasehold system, it risks disturbing something even more fundamental: the confidence to own, invest and build.”