Leasehold in Practice

The public and political narrative has been dominated by the desire to “end feudalism”. The phrase may resonate with voters, but it misrepresents reality. The vast majority of England and Wales’ five million leaseholders live in properties that are well managed and function as intended. Only a small minority question the status quo, typically because of poor communication, mismanagement or opaque service charges. They are far from representative.

To call leasehold “feudal” is to mistake rhetoric for fact. Feudalism was abolished centuries ago. Leasehold is a modern form of property ownership rooted in commercial law and refined in the twentieth century to provide certainty in multi-occupancy buildings. It is not perfect and reform is needed, but it is far from unworkable.

Where leasehold works

Most leasehold structures deliver what they are designed to: management of communal areas such as communal gardens, communal hallways, lifts and other common parts. When management is professional and carried out properly and when accounts are transparent and communication is clear, leaseholders generally experience stability and satisfaction.

Many flat owners can exercise rights to take over the management of their buildings through the Right to Manage (RTM) or collectively acquiring the freehold of their building. With this comes more control and rights for leaseholders.  

Within the existing framework there is an opportunity for leaseholders to challenge service charge budgets, particularly where major works are concerned at the First-tier Tribunal and, generally, service charges cannot be enforced unless determined as reasonably incurred. . 

The stability of lease terms is another strength. Once granted, leases cannot be unilaterally varied except in limited circumstances via the tribunal. 

Where it fails

Not every building runs smoothly. Poor management, lack of transparency and weak communication can erode trust. Many leaseholders remain unsure what they are paying for or misunderstand their responsibilities. Clearer information, both at the point of purchase and throughout ownership, is essential.

Rebuilding confidence requires practical change, not wholesale replacement. Even if the government bans new leasehold flats, millions of existing flats will remain as leasehold. Therefore, what we need is a focus on how to make the current system work better for all. This involves education and information.

The knowledge gap in leasehold reform will need to be addressed, enabling consumers to understand the difference between commonhold and leasehold but also in other increasingly popular forms of tenure, specifically Right to Manage and collective enfranchisement.

My experience is that where issues arise, they usually stem from poor practice, lack of engagement and education rather than structural flaws. The government’s intention to professionalise managing agents through mandatory qualifications and a Code of Practice is therefore welcome. Done well, it would raise standards, ensure accountability and reduce disputes. And many leaseholders prefer a competent managing agent to the burden of self-management.

The LAFRA and the next phase

The LAFRA aims to make it cheaper and easier for leaseholders to extend leases or buy freeholds while improving transparency and fairness. Banning new leasehold houses and extending standard lease terms to 990 years are seen as positive steps, but these provisions along with many others remains in limbo pending secondary legislation and further clarification.

Delays stem from complex issues such as the proposed abolition of marriage value, which had prompted Human Rights challenges. Until this is resolved (it could mean a further delay pending the outcome of the next stages), uncertainty will persist, slowing transactions and leaving professionals advising on hypotheticals. The priority should be implementing existing measures where appropriate alongside introducing new legislation. Rushed reform creates confusion, while careful reform builds confidence and provides clarity.

Commonhold – potential and pragmatism

Commonhold is being promoted by the government as the long-term replacement for leasehold, promising democratic management and transparency. In reality, however, major obstacles remain. Lenders are cautious, many developers remain unconvinced and consumers are unfamiliar with the model. Questions also persist around mixed-use blocks (specifically in relation to shared ownership and retirement housing), arrears, insolvency and the lack of tribunal oversight for commonhold disputes.

A phased approach is the only realistic route: to test commonhold on selected new developments, refine it and scale gradually. Also continued engagement with existing commonhold models where it is working well. Abolishing leasehold before its replacement is proven would be reckless. With nearly five million existing leasehold homes, policymakers must avoid undermining property values or market stability in pursuit of a rash political pledge.

Reforming the existing system

Leasehold is not broken, but it needs refining. The LAFRA’s emphasis on transparency, clearer information and regulation of service charges is a step in the right direction. Mandatory qualifications for managing agents, better consumer education and use of technology (including AI for routine queries and document access) could materially improve the leasehold experience.

For those seeking greater control, RTM remains a useful stepping-stone, with criteria recently relaxed. But under the Building Safety Act, RTM companies must understand liability boundaries and take advice before assuming responsibility.

Balanced reform is what is needed now. Reform must improve governance and accountability without dismantling a system which mostly works well. Leasehold, like any legal construct, is only as good as the people operating it. The goal should be refinement, education and information, not eradication, so that the best examples set the standard for all.

That is where professional bodies such as ALEP are crucial: promoting excellence, spreading best practice and ensuring that leaseholders and freeholders alike can access competent, transparent and fair advice. If government, practitioners and consumers work together on that basis, leasehold can evolve into a modern, robust and trusted form of ownership for the decades ahead.

Shabnam Ali-Khan, Partner, Russell-Cooke and member of the Association of Leasehold Enfranchisement Practitioners (ALEP)