Plans to reinvigorate commonhold and make it the default tenure have been announced today but will initially only apply to new homeowners.

Unlike leasehold ownership where third-party landlords own buildings and make decisions on behalf of the occupants, the government says the proposed changes will empower homeowners to have an ownership stake in their buildings from the outset and give them greater control over how their home is managed and the bills they pay.

Following the introduction of a comprehensive new legal framework for commonhold, new leasehold flats will be banned. In the meantime, the government says it will continue to implement reforms to help millions of leaseholders “who are currently suffering from unfair and unreasonable practices at the hands of unscrupulous freeholders and managing agents”.

The government says it has already empowered leaseholders with more rights and security – enabling them to buy their freehold or extend their lease without having to wait two years from the point they purchased their property and overhauling the right to manage – putting more leaseholders in the driving seat of the management of their property and service charges.

Supporting delivery of a Labour manifesto commitment – the government says the reforms “mark the beginning of the end for the feudal leasehold system”.

Housing and Planning Minister Matthew Pennycook said: “This government promised not only to provide immediate relief to leaseholders suffering now but to do what is necessary to bring the feudal leasehold system to an end – and that is precisely what we are doing.

“By taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners, not third-party landlords, who will own the buildings they live in and have a greater say in how their home is managed and the bills they pay.

“These reforms mark the beginning of the end for a system that has seen millions of homeowners subject to unfair practices and unreasonable costs at the hands of their landlords and build on our Plan for Change commitments to drive up living standards and create a housing system fit for the 21^st century.”

Changes set out in the new commonhold white paper include:

• New rules that will enable commonhold to work for all types of developments, including mixed-use buildings and allowing shared ownership homes within a commonhold
• Greater flexibility over development rights, helping developers build with confidence and maintaining safeguards for the consumer
• Giving mortgage lenders greater assurance with new measures to protect their stake in buildings and protect the solvency of commonholds – such as mandatory public liability insurance and reserve funds and greater oversight by commonhold unit owners to keep costs affordable
• Strengthening the management of commonholds, with new rules around appointing directors, clear standards for repairs, and mandating use of reserve funds
• Providing an enhanced offer for homeowners – including requiring greater opportunities for democracy in agreeing the annual budget, clarifying how owners may change “local rules” over how a building is run and new protections for when things go wrong.

A new Code of Practice will set out how costs should be apportioned in commonhold, aimed at providing consumers with transparency and clarity.

The government says it is committed to strengthening regulation of managing agents. It will also launch a consultation to ban new leasehold flats later this year to explore the best way forward.

A new draft Leasehold and Commonhold Reform Bill will be published later this year setting out the legal framework for how reformed commonhold will work.