A draft Bill provides a vital opportunity for policymakers to work with the sector to get the reforms right before legislation is passed into law. We will continue to engage with policymakers throughout the process to ensure the voice of property professionals is heard and that the final legislation supports a fair, transparent and well-functioning housing market.
Speed up ground rent drop
High or escalating ground rents have created significant problems for homeowners and have often made properties difficult to sell or remortgage. We welcome the UK Government’s commitment to ultimately bring them down to a peppercorn rate.
However, our evidence highlights concerns about the pace of the proposed reforms. The draft Bill proposes a phased reduction in ground rents over 40 years, which is too slow to provide meaningful relief for many existing leaseholders.
The legislation must also ensure that the introduction of a cap does not create unintended consequences. Rents that are currently below the proposed cap must not be increased to reach it where no escalation clause currently exists.
Service charges are a bigger problem
While ground rents have received significant political attention, our members emphasise that service charges are often the most significant barrier to selling leasehold homes.
Buyers are deterred by high or unpredictable service charges, particularly where charges appear disproportionate or lack transparency. Reforms must address how service charges are calculated and communicated to residents.
Improving transparency and ensuring that charges accurately reflect the cost of maintaining buildings would help restore confidence in the market and support smoother property transactions.
Building safety burdens remain
Although UK Government programmes are underway to remediate unsafe cladding and other defects, many leaseholders are still facing uncertainty and financial pressure. In some cases, properties remain difficult to sell because of unresolved safety concerns, while in others the cost of insurance for affected buildings has risen significantly.
The Bill must take account of these wider challenges and ensure that reforms to leasehold and commonhold are supported by effective solutions to building safety defects and the financial burden faced by residents.
Education will be vital to support tenure shift
A central aim of the draft Bill is to establish commonhold as the default tenure for flats in the future. Under commonhold, property owners collectively own and manage the building, rather than leasing their home from a freeholder.
Propertymark broadly supports the development of a stronger commonhold framework. In particular, the proposed reduction in the threshold for converting existing leasehold blocks to commonhold could make it more feasible for residents to transition away from leasehold arrangements.
However, the move towards commonhold will represent a significant shift for the property market. Consumers and property professionals will need clear guidance and support to understand how the system works, including the governance arrangements and responsibilities involved in managing commonhold buildings.
Implementing the RoPA report
Improving the regulation of the sector is essential if reforms to leasehold and commonhold are to work effectively for consumers. Propertymark continues to support the recommendations made by the Regulation of Property Agents (RoPA) working group in 2018, which call for mandatory qualifications, a code of practice, and a licensing system for property agents.
Introducing these reforms alongside changes to leasehold and commonhold would give consumers greater confidence in the professionals advising them and help ensure consistent standards across the sector.
