Why replacing leasehold may be easier said than done

New Delhi, India Jul 8, 2026 ALN: When Sally, 74, bought her two-bedroom flat in 2021, she hoped it would be the home she could peacefully retire in.

However, she says buying a leasehold home has led to terrible stress.

There are around five million leaseholders in England and Wales. Sally is one of over 1,000 people the BBC spoke to in an attempt to understand the pressures on leaseholders. Most reported that rapidly rising service charges and ground rent costs make them feel they have little control over their own homes.

When she moved into her London flat, Sally says service charges were around £2,600 a year. One year, they totalled more than £5,400.

"That was a really bad year. Me and my fellow owners were very stressed and anxious. There were tears and I remember us talking about how we were going to pay."

Now, the government wants to fundamentally change how flats are owned.

Under its Commonhold and Leasehold Reform Bill, new leasehold flats will be banned and replaced with commonhold, a system where residents collectively own and manage their buildings.

"The people who should own buildings, and who should exercise control over their management, shared facilities and related costs are not third-party landlords but the people who live in flats within them and who have a direct stake in their upkeep," said Housing Minister Matthew Pennycook in a speech in April.

Freeholders argue that the English Housing Survey suggests 93% of leaseholders living in flats are satisfied with being owner-occupiers (the survey doesn't ask specifically about being a leaseholder).

Despite this, the government is introducing reforms widely seen as the biggest shake-up of home ownership in decades.

However, as commonhold moves closer to becoming the default for new-build flats, questions remain over whether it can avoid creating a new set of challenges for homeowners. Can a system that has existed for centuries really be replaced, or will a whole new set of problems emerge?

"Feudal" system

To understand the complexities of today's leasehold system, described by many, including Housing Minister Matthew Pennycook, as "feudal", we have to go back almost 1,000 years.

In the Middle Ages, William the Conqueror took control of England's land and granted parts of it to loyal nobles, who leased it to others for a fixed term.

While today's leasehold system is very different, critics argue the basic principle remains the same - homeowners pay for the right to occupy land they do not fully own.

For almost 60 years, successive governments have tried to reform it, with one alternative repeatedly put forward: commonhold.

It was first introduced into law under Tony Blair's government in 2004, but developers have rarely chosen it. According to the Land Registry, there are only 18 commonhold developments in England.

Commonhold is a type of home ownership where flat owners have a share in running their building. There is no freeholder, and residents vote on decisions about shared spaces and maintenance. Homeowners are expected to pay into a reserve fund and either manage the property themselves or appoint a managing agent.

Nick Hopkins, Professor of Land Law at UCL and specialist adviser to the House of Commons Housing, Communities and Local Government Committee, says that after years of looking into the issue he is "convinced" commonhold is the right direction for the government to go in.

He states that flat owners would still have to pay towards the upkeep of their building, but they would have "much more autonomy" over decision-making under the proposals.

John Bartholomew, 81, and his wife have lived in one of England's commonhold developments in Somerset for around 12 years. The development consists of two blocks of flats and five townhouses. They have an annual general meeting and come together to discuss issues such as the shared car park.

He says he has been lucky to live in a place where people agree on the work that needs to be done.

"If a renegade came in, we might struggle," he says. "If we want something done, we have to agree that part of the fee will be put to that purpose, like the repainting of the sheds."

Freeholders argue that they act as "stewards" of buildings.

They point to research by the Royal Institution of Chartered Surveyors (RICS), which they say suggests Scotland's commonhold-like system has created "major hurdles" in carrying out essential building maintenance, with 28% of buildings in critical disrepair.

Similar concerns were raised in evidence to MPs scrutinising the draft legislation. Mari Knowles, a landlord and tenant lawyer, told the Select Committee there was a risk of a "stalemate situation" where residents may not agree on paying for maintenance and investment in a building.

She stated that she had worked with resident-managed buildings that "traditionally have not paid into the reserve fund... now the buildings are severely dilapidated, and they are all looking at five-figure or six-figure bills."

Freeholders

Under the leasehold system, the freeholder appoints a managing agent to maintain and service the common parts of a building. Flat owners are then given the bills.

Leaseholders are also legally obliged to pay ground rent - a fee paid for the land beneath their building - to the freeholder. Depending on the terms of the lease, the amount can either double at fixed intervals or increase in line with inflation, which can make a property harder to sell, mortgage, or remortgage.

Freeholds can be bought and sold between investors who do not live in the building, and sometimes not even in the country, meaning the English system of flat ownership has become "financialised", according to Hopkins.

He believes a move to commonhold would change that, ensuring "the only financial interest in the block is with those living in it."

Under the proposed plans, ground rents will also be capped at £250 before falling to a "peppercorn" rate - effectively zero - after 40 years. In a debate in Parliament on Thursday, a number of MPs called for that process to be sped up and described calling ground rents as "money for nothing".

Freeholders say this overlooks the long-term oversight and legal accountability they provide, including maintaining buildings and acting as an independent party when disputes arise.

Arguments over costs

The BBC wrote to all of the groups that run commonhold developments in England and Wales, and not all described a harmonious way of living.

One resident described commonhold as a "nightmare". He says one flat owner has refused to pay towards maintenance and other residents now have to pay more to cover that share. The collective is now £10,000 in debt.

"The government is pushing commonhold forward, but it's not the way to go. It's terrible - a disaster," he said.

Due to the ongoing dispute, the man did not want to be named for this article, but said the leasehold system would have offered more protection in his case because, "if a leaseholder doesn't pay there is something in the contract that will say 'you forfeit the lease'. With commonhold, that doesn't happen, so the payments fall on everyone else."

A freeholder can seek to repossess someone's home if a leaseholder doesn't pay service charges, something that will also be abolished under the reforms. In a commonhold, disputes between owners must be resolved through the courts. Under the changes, in the most extreme cases, homeowners who refuse to pay could be forced to sell their home to settle debt.

Hopkins accepts that commonhold is "not a panacea for everything that can go wrong when you own a flat," but says it is "the right legal basis to have to deal with the issues that can go wrong". He states that commonhold will require "a bit of a cultural change" and that people will need to view themselves as "stewards" of their building.

English system is a global outlier

One of the main arguments from Hopkins and many others is that commonhold, or similar forms of ownership, already work in much of the rest of the world.