The recent Labour Party conference has confirmed the Party’s policy of replacing the leasehold system by making the commonhold form of freehold title the default tenure.  The 5 million leaseholders who live in England and Wales , often in marginal constituencies , will welcome such a proposal. Virtually all the English-speaking world has done away with the leasehold system.

An attempt was made to do this in 2002. This failed as commonhold was not made compulsory for new build developments. It was too hard for existing leaseholders to convert to commonhold. Everybody in the block including lenders had to agree to transfer to commonhold.

The Labour front bench have said repeatedly that they will implement the 2020 Law Commission’s recommendations. The Commission has produced 3 detailed reports on :

• Reinvigorating Commonhold
• Reforming the right to management system
• Making it easier for leaseholders to extend their leases and to buy out their freeholder.

The House of Commons Library has summarised policy development here including the failure of the Government to deliver on their repeated promise to introduce commonhold and other related reforms.

Commonhold is a form of freehold title. Under commonhold the commonhold company owns the freehold title of the block of flats including the common parts. Each flat resident owns a share in the company. The legal relationship between all flat residents is set out in a commonhold community statement. Residents elect directors to run the company. No ground rent is payable as there is no landlord.

Under the 2002 Act leaseholders could set up right to manage companies that allowed leaseholders to take over the management functions from the freeholder. Such companies are easy to set up and allow leaseholders to decide how to manage their building. This often means lower service charges especially for insurance. The Law Commission is proposing to improve the effectiveness of such companies.

The Commission is proposing to improve the process by which leaseholders can buy the freehold or extend their lease (“enfranchisement”). Their recommendations would create an improved enfranchisement regime that would be simpler and cheaper for leaseholders in flats and houses.

The Co-operative Party is holding an online discussion of with panel members on  this issue on Wednesday 1 November at 6pm.