The Housing, Communities and Local Government Committee reviewed the draft Commonhold and Leasehold Reform Bill and made a few recommendations and comments that they hope will be included in the final bill.
Ground rent
With regard to the £250.00 ground rent cap that is hoped to come into force in late 2028, the commission suggest that it could as soon as 2027. They also point out that the bill should confirm that the £250.00 cap will come into force 2 months after Royal Assent not at a time declared by ministers.
The ground rent cap is then due to reduce to a peppercorn in 40 years; however the committee want to see further evidence of the impact on the industry if it came into force in 20 years.
There is also concern that some landlords will try to get around the £250.00 ground rent cap by changing to appurtenant property and therefore still charge the current ground rent. The commission want to see an amendment to the bill to close the loophole.
Enfranchisement recommendations
The commission were disappointed that the bill did not implement some of the other recommendations such as the use of restrictions rather than payment development value in a collective enfranchisement claim.
The bill needs to make it cheaper for leaseholders to collectively enfranchise now otherwise they will be trapped in a two-tier market. The other commission recommendations should be implemented to give short terms relief to Leaseholders.
The commission also want to see the implementation of being able to collectively enfranchise and right to manage claims over multiple blocks.
Regulation of managing agents
The commission want to see a new independent public body to regulate the managing agents and they see this as a necessary intervention to support leaseholder.
Fleecehold and private estates
The commission believe that more needs to be done for leaseholders on fleecehold estates.
LAFRA 2024
The commission state that the delay in implementation is in part because of the flaws in LAFRA which have not been addressed in the bill and this should therefore be addressed in the final bill.
The government must bring forward the consultation on valuation rates.
The government also need to ensure that measures are made to make sure that enfranchisement is cheaper and implemented within 2 months of the bill receiving Royal Assent.
Commonhold
The commission recognise that commonhold may not necessarily be cheaper but the commonholders will have greater democratic control over contractors.
In the first instance the leaseholders will need to enfranchise (if they have not already done so) before they can convert to commonhold.
The commission believe the bill should also insist on a reserve fund for new and existing leaseholders as well as commonhold blocks.
Conversion
The bill makes it clear that you will need 50% of leaseholders to enfranchise and then once enfranchisement has taken place 50 of the leaseholds to agree to convert to commonhold.
The commission want to see that it is mandatory that if you enfranchise you have to convert to commonhold.
Non-consenting leaseholders
Currently the non-consenting leaseholders do not have to contribute to the enfranchisement costs if they later join commonhold. The commission suggest that the government should make a mechanism for the non-consenting leaseholders to pay towards all costs if they want to join commonhold.
Building safety
Final bill must require the Freeholder to disclose information about building safety in any collective claim.
Decision making
The commission suggest that the government need to issue guidance after Royal Assent or the relevant documents must be provided to unitholders regarding different votes.
Shared ownership
The government need to clarify the circumstances in which shared ownership providers will exercise the vote
Land registry
The government need to invest in digitising the HMLR systems
Retirement housing sector
The commission recognise that this sector may have to remain leasehold but should be covered by the regulation of managing agents because the leaseholders need a way to get assistance with high service charges and bad management.
Promoting commonhold
The government needs to invest in education and further fund LEASE because there is a lack of education for leaseholders.
Delegated powers
The commission set out a number of clauses that need to be amended because some of the powers for secondary legislation and draft bills are drafted too broadly.
Timeline for final bill
The commission recognise that the leaseholders are calling for more urgency for the final bill.
In the commissions opinion the final bill needs to be available in the autumn of 2026 with the second reading in November 2026. If this timetable is followed it should have Royal Assent by mid-2027.
The government now has until 26 July 2026 to reply.
