RICS Property Journal features an article by Lauren Fraser and Laura Bushaway on the draft Commonhold and Leasehold Reform Bill

The draft Commonhold and Leasehold Reform Bill is set to mandate commonhold for new flats, and overhaul key leasehold mechanisms. What does this mean for developers, landlords, and existing leaseholders?

The government has confirmed its intention to ban the sale of new flats on a leasehold basis, and mandate that developers comply. While there is yet to be a confirmed timing for this ban, various relevant provisions of the bill will need to be brought into force before. Simultaneously, the Government is proposing reforms to the commonhold model, which has seen low uptake since it was introduced in 2002.

There will be no automatic changes to existing leasehold flats, which can continue to be bought and sold on a leasehold basis. However, some aspects of leasehold are planned to be modified, for instance, the introduction of standard form service charge demands and accounts for leaseholders of flats and freeholders on private estates.

The draft bill also seeks to abolish forfeiture as a remedy available to the landlord for breach of covenant. The replacement proposed is a process of enforcement notices, which would give the courts powers to make such orders as they see fit, albeit they would not be able to terminate the lease except in very limited circumstances relating to subleases.

Lauren Fraser, Senior Associate, and Laura Bushaway, Knowledge Development Lawyer, in our Real Estate Disputes team, contribute to RICS Property Journal.

The draft bill marks another huge step along the path to seismic change to the home ownership model in England. Landlords, developers, investors, leaseholders, tenants and stakeholders in the residential sector should respond to the accompanying consultation, given the complexity of the legislation and the likelihood of practical and wider issues arising from the proposed reforms.

"All stakeholders in the sector should understand what the changes will mean for them. For example, whether a building has a leasehold structure or commonhold model, the owners of the flats/units within the building will be responsible for the costs incurred in running that building; only time will tell which model is ultimately cheaper.

Read the full article in RICS Property Journal here.