The draft Commonhold and Leasehold Reform Bill is expected to be put before Parliament by the end of the year. This will set the clock ticking on the end of new leasehold flats, although without a definitive timeline. 

The draft Bill includes the provisions to ban the grant of new long leases of residential flats. The aim of the Government is to enforce the use of Commonhold as the default tenure, although the ban will not be implemented until the new Commonhold framework is in force and the Government considers the market has had time to adapt. It will however be the ban that forces the market to accept the tenure.

The ban is squarely aimed at new flats, being new build blocks, conversions from houses or commercial to flats and buildings that did not previously contain flats. 

Many will be keen to see new build Commonhold flats as a test market, which it appears will be the case. Developers, on the other hand, will likely prefer a larger market introduction of Commonhold, with conversions of existing freeholds having some degree of enforcement - avoiding a two tier market. The desirability of a Commonhold flat and its relative value to a leasehold flat, in which building management should play a part, will be key. 

For existing flats, for which there will remain the right to manage or enfranchise, conversion to Commonhold may be a legal step too far, unless conversion is automatic or enforced. Amendments to the Bill, following consultations this year, will be read with interest.  

For more information, please contact a member of Edwin Coe's Residential Property team.