Understanding leasehold

Eight years after the Grenfell Tower tragedy, which claimed 72 lives, tens of thousands of people remain in unsafe homes, with remediation efforts slow and riddled with uncertainty, according to the new report from the House of Commons Public Accounts Committee.

The Ministry of Housing, Communities and Local Government (MCLHG) and the Welsh Government have proposed new regulations overhauling how insurance costs are charged to leaseholders in multi-occupancy buildings, to increase transparency and prevent leaseholders from being overcharged through commissions and hidden fees. While Propertymark supports efforts to ensure fairness for leaseholders, we have warned Ministers that these reforms alone will not bring down insurance premiums; a focus on building safety and insurer confidence is needed to achieve real change.

The UK Government has committed to banning the sale of new flats on a leasehold basis and reforming the legal framework for commonhold, so it becomes the default and preferred tenure. It will also become easier for existing leaseholders to convert to commonhold, although the complexities of this may take longer to work out. Few agents in England and Wales have experience with commonhold, as less than 20 developments currently exist, so Propertymark has broken down some key parts of the proposals to help members understand the change.

The UK Government has announced its next steps in a significant programme of reform to property ownership, aiming to abolish the traditional leasehold system and promote commonhold as the standard tenure for flats in England and Wales.