A complete ban on new leasehold properties in England and Wales will not be implemented before the next general election, according to housing minister Matthew Pennycook, who has outlined a multi-year phased approach to dismantling the tenure system.
Speaking at a policy event, Pennycook indicated that leasehold reform would take years to complete, despite existing legislation that bans new leasehold houses and planned extensions to cover flats. The minister emphasised that reforms must be sequenced carefully to prevent disruption to housing supply and avoid legal challenges to the system.
Market stability prioritised
The government’s approach prioritises market stability as it attempts to unwind a tenure model that has faced widespread criticism over high service charges and management standards. The decision represents a pragmatic shift in delivery timelines, though it has attracted political criticism from opposition parties.
The Green Party has accused Labour of retreating from earlier commitments, noting that reforms will apply only to new properties and that implementation has been delayed. Pennycook rejected these claims, stating the government’s objective “by the end of this parliament” remains the effective dismantling of leasehold and the “emancipation” of leaseholders.
The minister argued that an immediate ban is not viable given the legal complexity of abolishing a system with centuries-old foundations, dismissing criticism as “glib soundbites”.
Impact on leaseholders
Pennycook cited examples from his South East London constituency to illustrate current challenges facing leaseholders. One constituent, Tara, has seen her service charges rise from £1,230 to over £4,400 annually over four years—a 260% increase. Another constituent, Andy, pays nearly £800 per year in ground rent with no corresponding service, a figure that could exceed £1,000 under inflation-linked terms in his lease.
Approximately five million leasehold dwellings exist in England and Wales. The minister described the current system as “feudal in nature”, noting that the term ‘freeholder’ dates to the Domesday Book of 1089, with the first leasehold estates appearing shortly after.
The modern leasehold system emerged in the 1920s when landlords, facing new legislation that suppressed rents and restricted eviction rights, began selling long leases of 99 to 125 years to generate revenue while retaining land ownership.
Legislative history
Previous reform attempts include the 1967 Leasehold Reform Act, which granted enfranchisement rights to house leaseholders; the 1985 Landlord and Tenant Act, which consolidated protections against unreasonable service charges; the 1993 Leasehold Reform, Housing and Urban Development Act, which extended enfranchisement rights to flat leaseholders; and the 2002 Commonhold and Leasehold Reform Act, which introduced the Right to Manage and expanded enfranchisement rights.
The phased approach to reform comes as the property sector faces significant tax changes from April 2027, adding to the regulatory landscape affecting landlords and property investors. Meanwhile, buy-to-let lending conditions continue to shift as the market adjusts to evolving mortgage availability.
Conclusion
The government’s decision to pursue gradual leasehold reform rather than immediate abolition reflects concerns about market disruption and legal complexity. For property investors and buyers, the extended timeline means the leasehold system will remain a feature of the English and Welsh property market for the foreseeable future, with reforms affecting only new-build properties initially.