Leasehold reform is about real ownership. Conservatives should own it

Jonathan Hulley considers the Conservatives approach to leasehold reform, arguing that this should be cautiously supported but that commonhold should not be made compulsory without a carefully considered transition alongside support from key industry stakeholders.

There are few things more Conservative than the desire to own your own home. For most people, home ownership is not an abstract idea. It is the reward for years of work. It is the place where families are raised, savings are invested, roots are put down and communities built. That is why leasehold reform should be a Conservative cause.

Properly understood, it belongs to one of the great Conservative traditions: the property-owning democracy. That tradition was never about defending every arrangement attached to property, however unfair or outdated. The answer was not to put more power in the hands of the state. It was to put more power in the hands of citizens: to spread ownership, spread responsibility, and give more people a real stake in their community and their country.

From Noel Skelton, who was the originator of the phrase, ‘property-owning democracy’, through to Eden and Macmillan, driving the post-WW2 reconstruction, to Thatcher and Cameron, who both turbo-charged homeownership through the Right to Buy; the aim was not merely to protect property ownership, but to widen it. Theresa May understood this too. Her government began the modern Law Commission’s work on leasehold and commonhold reform, and she drew on Eden’s language of property as ‘a reward, a right and a responsibility.’

Property ownership should also mean security, responsibility and control. We should not defend the worst aspects of leasehold: opaque service charges, excessive administration fees, weak managing agents or freeholders who treat homeowners as a captive market.

The question is not whether leasehold should be reformed. It should be. The question is whether reform will create real, usable ownership or replace one form of dependence with another.

The principle is simple, and Conservative: those who pay for a building should have a say in how it is run. Managing agents should answer to homeowners, not distant freeholders. Decisions on repairs, insurance, reserve funds and common parts should be made by those with a stake in the building. So, responsibility should be as close as possible to those affected by the decision. But commonhold is not a silver bullet.

Replacing leasehold with commonhold will not abolish the cost of roofs, lifts, fire safety, building insurance, major works, reserve funds or professional management. It does not abolish the problem of power. It relocates it.

Leasehold concentrates power in freeholders, landlords and managing agents. Commonhold transfers more power to homeowners. That is welcome. But in practice, power may also sit with resident majorities, committees, absentee owners, investors, professional advisers or those who best understand the rules.

The Conservative test is not simply: who owns the freehold? It is who makes the decisions, how are they checked, who pays when things go wrong, and who protects the person who cannot easily move, cannot afford a dispute and cannot outvote the majority?

A commonhold association is, in effect, a small business with multiple shareholders. It needs clear rules, transparent costs, accountable management and protection for minorities. Otherwise, landlord power could simply be replaced by resident deadlock, majority overreach or a new layer of bureaucracy. That would not be real ownership. It would be another source of frustration.

The Law Commission did not pretend that the move from leasehold to commonhold would be simple. It envisaged a long transition, with existing leasehold, new commonhold and converted blocks operating alongside one another. The Law Society and the Chartered Institute of Housing share these concerns and have warned that rushed reforms risks failure without a lengthy transition, market readiness, lender support, and improved Land Registry capacity.

Many blocks will not transfer neatly from one simple system to another:

• A single building may contain old leaseholders, new commonholders, commercial premises, shared ownership homes and affordable housing.

• Some residents may support conversion, while others may oppose it. Something like the compulsion that applies in listed company takeovers may be required to ensure management is even possible.

  
  

• Some may want higher spending on the building, while others may struggle to afford it.

  
  

• Some freeholders may still retain interests in parts of the site.

These buildings will need clear rules, competent managing agents, proper accounts, reserve funds, dispute resolution and sound advice.

All of that takes time and costs money. If the system is badly designed, the owner who was promised more control may simply find himself facing more meetings, more paperwork and higher bills. People may escape an unaccountable freeholder only to face a system they struggle to understand.

Labour’s instinct is too often to mistake administration for empowerment: to address a real problem by introducing a new system of duties and yet more regulation. But a reform meant to give people control must not leave them with more paperwork, higher charges and less confidence.

One of the least glamorous truths about commonhold is also one of the most important: it will not remove the need for managing agents.

In all but the smallest blocks, homeowners will still need professional help to

manage accounts, contractors, repairs, fire safety obligations, reserve funds, arrears and disputes. Commonhold changes who appoints the managing agent. It does not remove the need for them. 

Most people buy a flat to have a home, not to become a property manager. If resident-controlled buildings are to work, they will need proper support from managing agents who are trained and accountable. 

That is why Conservatives should insist on clear information on service charges, and strong rights for homeowners to challenge poor performance. Professional bodies should be encouraged to develop specific accreditation schemes, so common holders can have confidence in those who they appoint.

A property-owning democracy cannot work if people own the title but have no real grip on the bills. That is why the Conservative position should be clear:

• Support leasehold reform but not make commonhold compulsory, or at least not before a lengthy transition and not without the support of key industry stakeholders.

  
  

• Do not abolish one complicated system only to create an even more complicated and expensive one.

  
  

• Do not solve some landlord abuse by creating resident deadlock.

  
  

• Do not leave existing leaseholders trapped in a system that everyone agrees needs reform not replacement.

When people work hard, save and buy a home, they should not be buying a bundle of frustrations. They should be buying security, independence and a stake in the future. That is what Conservatives stand for.

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Jonathan Hulley is the Hon Treasurer of the Society of Conservative Lawyers. He is also a leading social housing lawyer and was the Conservative Parliamentary candidate in Twickenham in July 2024.

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Society of Conservative Lawyers, an association of lawyers who support or are sympathetic to the aims of the Conservative Party. Members hold a range of different views within those parameters and the views expressed in its publications are only those of their authors, and not necessarily held by all members of the Society or by the Conservative Party. The views expressed in this post are those of the authors alone, who take sole responsibility for all errors and omissions.