Housing minister Matthew Pennycook has tried to calm critics who claim the government’s resolve over leasehold reform may be weakening.
Pennycook has gone on record that the government will ‘get the job done’ by the end of this Parliament, making Commonhold the default tenure for new flats.
But he has again said that wholesale reform cannot be achieved overnight and should be phased to avoid market disruption.
The government’s draft Commonhold and Leasehold Reform Bill introduces a new legal framework for Commonhold and includes measures to ban the use of leasehold for new flats, building on the existing ban on most new leasehold houses.
The draft Bill proposes a new conversion process blocking a move to Commonhold where at least 50% of qualifying leaseholders agree.
The government intends to cap ground rents at £250 per year, before reducing them to a peppercorn rate after 40 years.
A statement from Propertymark, the agents’ trade body, says: “Propertymark supports the ambition to make Commonhold a more realistic option, but we have warned that the shift will need careful implementation.
“Commonhold will involve new documents, new processes, new management arrangements and new responsibilities for homeowners and property professionals.
“Consumers and agents will need clear guidance and practical support to understand how the system works.”
Propertymark welcomes the commitment to bring ground rents down, but says it’s concerned about the proposed timeframe.
The body states: “Our evidence to the Housing, Communities and Local Government Committee stated that a 40-year transition is too slow to provide meaningful relief for many existing leaseholders.
“We have also warned that the cap must not allow ground rents that are currently below £250 to be increased to that level where no escalation clause exists.
“This matters for the market now. Our research found that 78% of agents said leasehold properties with escalating ground rent would struggle to sell, even if priced correctly.”