In submissions, seen by The Telegraph, leaseholders said their flats would be rendered virtually unsellable, as buyers would opt for new commonhold homes, without the problems associated with leaseholds, including the threat of escalating ground rents and service charges.
They said Labour’s bill did not include clear enough pathways for their flats to be converted to commonhold.
One leaseholder who responded to the Government’s consultation said: “The draft Leasehold and Commonhold Reform Bill will not end the feudal leasehold system for me and my long-suffering neighbours. Instead, it will condemn us to ongoing financial abuse in a two-tier system.”
Another said that a two-tier system had already been introduced by the ban on ground rents on new leases in legislation passed in 2022. They wrote: “We now have a two-tier leasehold market whereby those with leases containing ground rent clauses, prior to the 2022 Act, are at a considerable disadvantage.”
Caroline Wild, a lawyer at legal firm Forsters, said: “As they currently stand, the proposals risk creating a two-tier market in which commonholds are seen as superior and leasehold properties become harder to sell or mortgage.
“The draft bill prioritises future commonhold developments while offering no practical, affordable or time‑bound route for existing leaseholders who could be left trapped; worse off than before.”
Other respondents raised concerns about the Government’s proposed solution of commonhold, including that commonholds would rely too heavily on inexperienced neighbours handling complicated administrative processes, and residents not falling out with each other.
Simon Carne, chairman of RG Kensington Management Company, a firm set up to administer a block of flats of which it is the freeholder, described the proposals for “common rules” for blocks as “utterly naïve about how fractious a community of neighbours can quickly become if those at the head do not manage with skill and care”.
Mortgage lenders also said that it could cost millions of pounds to update their systems for commonhold. Industry body UK Finance said: “This work will likely cost individual mortgage firms multi-millions of pounds to implement.”
Pension firms warned that retrospectively introducing a cap on ground rents “erodes investor confidence that the UK is a safe place to invest”.
Nationwide, which manages a £7bn pension scheme, added: “Such action damages the international reputation and appeal of the UK as a place of investment.”
