HCLG Committee publishes report on draft Commonhold and Leasehold Reform Bill

The Housing, Communities and Local Government Committee has published its report on the government’s draft Commonhold and Leasehold Reform Bill.

The draft Bill sets out proposed changes to leasehold and commonhold law in England and Wales. The Committee describes it as a significant step towards reforming leasehold home ownership, including through measures to cap ground rents in existing leases, establish a new legal framework for commonhold, and make commonhold the default tenure for new flats in future.

The Committee says these changes could give homeowners greater control over decisions that affect their buildings. As part of its pre-legislative scrutiny, the Committee has recommended areas for further consideration as the government develops the final Bill for introduction to Parliament.

These include:

• the proposed timetable for introducing the £250 annual ground rent cap
• the evidence base for the proposed transition to zero ground rent
• measures to support existing leaseholders who may wish to convert to commonhold
• voting rights for shared ownership homeowners in commonhold associations
• regulation of property managing agents, including the possible role of an independent regulator
• the role of HM Land Registry in supporting future commonhold applications

Commonhold is a form of ownership where homeowners own their individual property and jointly own and manage the shared parts of the building through a commonhold association.

LEASE Chair Martin Boyd has written in more detail about what the move to commonhold could mean for leaseholders.

The report also highlights the importance of clear information for leaseholders and homeowners as the reforms progress. It notes that the transition from leasehold to commonhold will involve complex legal and practical changes, and that consumers will need accessible guidance to understand what the changes mean for them.

The government is expected to consider the Committee’s recommendations before introducing the final Bill.

“We welcome the publication of the Housing, Communities and Local Government (HCLG) Committee’s report on the draft Commonhold and Leasehold Reform Bill which recognises the scale of change now underway across leasehold and commonhold reform. Any legislative oversight or scrutiny that helps deliver substantial and much-needed change towards a fairer housing system is to be welcomed.

“The draft Bill addresses some of the most damaging features of leasehold, including high and escalating ground rents. More fundamentally, it signals a decisive shift away from leasehold as the default form of home ownership. Moving towards commonhold and making it easier to convert existing buildings where leaseholders choose to do so, has the potential to give homeowners genuine control, security and long-term certainty over their homes.

“We support the Committee’s wish to see an acceleration of the pace of change for leaseholders. However, careful and thoughtful implementation will be essential to ensure practical solutions are found for complex issues.

“We also welcome the report’s call for the regulation of property managing agents, including the establishment of an effective independent regulator.

“The proposed commonhold model of collective responsibility represents a new level of involvement and control for homeowners in the governance of their property. Millions of consumers are looking for clarity, confidence and practical support as the system evolves. Ensuring that all existing leaseholders understand how the system works will therefore be vital to the success of this transition.

“We know from supporting thousands of leaseholders every day that providing consumers with clear, accessible guidance will be essential to building confidence in the new system.”