Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill

L&Q response

February 2026

Executive summary

Shared owners and leaseholders have been vocal about their experience under the current leasehold system and the desire for greater transparency and control.

In this context, L&Q welcomes MHCLG’s efforts to introduce a homeownership structure that reforms the existing leasehold system and provides a greater feeling of openness and control for residents. 

We would encourage the Housing, Communities and Local Government Committee (‘the Committee’) to consider how best to manage the expectations of leaseholders and shared owners who may be hoping that the draft Bill will lower building management costs, eliminate the need for managing agents, and make homeownership in blocks simpler.

Commonhold will give those who live in a building more responsibility for its shared components but will not bring down the fundamental costs of running it or eliminate poor practice amongst managing agents. 

To ensure a smooth transition to Commonhold, we encourage the Committee to ensure the implications the draft Bill might have on housing associations (HAs) are accounted for.

L&Q is committed to providing good landlord services and is tightly regulated to ensure buildings are well maintained.

The draft Bill does not address how standardising Commonhold will mean HAs may no longer have full decision-making authority over the buildings where they house social housing residents and would still be subject to regulatory oversight, or one of the likely consequences of this - the end of mixed tenure blocks. 

L&Q would like the Committee to consider the following to ensure the Commonhold transition is a success: 

• As Commonhold Associations (CAs) will need to employ professionally qualified managing agents, implementation of the remaining recommendations of the Regulation of Property Agents: Working Group should be included in the definitive version of this Bill.
• Clear guidance will be required on the routes of redress available to HAs when a CA conversion leads to inadequate management of either the block or any shared facilities between blocks.
• Consideration of unintended consequences such as in the end of the development of mixed tenured blocks, development scheme viability implications (especially implications on the construction of shared facilities such as energy centres), and changing property valuations. 
• Reconsideration of the leasehold ban timeline on development and regeneration projects to avoid disrupting long running, multiphase schemes.
• Clear guidance will also be required on the roles and responsibilities of HAs in CAs, and whether Government is expecting HAs to convert to commonhold when possible. We would suggest that Right to Buy/Acquire Leases, and other leases granted in predominantly rented blocks, are made “Permitted Leases” and exempted from the ban on leasehold.
• That the ground rent ban should be extended to include ground rents payable under headleases of whole blocks, to ensure consistency and avoid unintended financial burdens on providers.

Implications on social landlords 

Existing buildings converting to Commonhold

We urge the Committee to consider the unique implications the Bill has on the social housing sector. 

Due to the complexity of the development and management of affordable housing, HAs often hold homes in mixed tenure blocks.

HAs can either be a “superior landlord,” the freeholder of a building where there are leaseholders, social renters, and shared owners, and/or an “intermediate landlord,” the leaseholder in a mixed tenure building in which another party owns the freehold.

Whether or not L&Q holds the decision-making power to form a CA depends on how many flats they area leaseholder of.

If L&Q is a leaseholder in 50% or more of the flats in the building, the decision to convert to commonhold is up to L&Q. If L&Q is a leaseholder in less than 50%, the decision is up to the leaseholders as whole, not just L&Q. 

In the case a CA is formed and social rented homes are the minority tenure in the building, L&Q will not hold the majority vote and will lose the right to make executive decisions on building management.

If other Commonholders are not engaged or knowledgeable on building maintenance this may result in significant issues such as a lack of insurance or inadequate cover, failure to comply with building and fire safety regulations, and poor maintenance of the building, also creating the risk that L&Q fails to comply with regulatory standards.

A potential solution would be for L&Q to appoint a CA director. However, doing so would incur significant costs, as it involves establishing new positions and navigating further organisational complexities. 

In L&Q’s experiences with dealing RTM companies, if an RTM director steps down, it can also be difficult to find an adequate replacement as the position requires voluntary responsibility, risk, and workload.

These experiences indicate that the same problems may arise within a CA. 

Shared owners will have a vote in the CA, except in exceptional circumstances.

If a shared owner does not staircase to 100% ownership and later decides to sell their share on the open market, L&Q remains the leaseholder for that flat and we retain a personal stake in the building.

This means shared owners can make decisions where we retain liability despite them only having a sublease.

We also urge the Committee to request guidance in cases where there is an estate with multiple blocks, but shared facilities (ex. energy centres) exist between a leasehold block and a converted CA block where L&Q does not have the majority vote. 

While the draft Bill is clear that freeholders will not be forced to convert to Commonhold, we urge committee to ensure Government will not enforce this on HAs through another measures.

It is not clear whether the Regulator of Social Housing (RSH) or the Housing Ombudsman will expect L&Q to convert to commonhold where this is an option for them, as, for example, a part of the RSH’s consumer standards or Tenant Satisfaction Measures.

L&Q does not usually opt to create an RTM company due to implications such as having to appoint an RTM director. 

Future development of buildings 

L&Q is a developer and is usually the long-term custodian of a building once it is developed.

This, alongside the need to meet regulatory requirements, means we have a personal stake in ensuring
buildings are well maintained.

We believe that a significant unintended consequence of this legislation is likely to make delivering mixed tenure blocks challenging, due to the likely complexities of managing such blocks in future.

L&Q and much of the social housing sector have been advocates for mixed tenure housing, as this helps foster an inclusive community, encourages a more balanced living environment and positive culture, with residents from diverse backgrounds and life stages living together.

It can also play a key role in de-stigmatising social housing and those who live in it.

However, to make certain that L&Q maintains the right to manage future buildings which contain social rented homes, L&Q will need to carefully consider the impacts of developing mixed tenure blocks on new schemes.

The continued necessity of managing agents

Although the Bill now gives CAs the power to approve an Annual Budget and select a managing agent (if they choose to have a managing agent at all), this does not necessarily mean the costs of running a building will decrease.

Service charges have increased due to rising building insurance premiums and changes in safety legislation following the Grenfell Tower tragedy, as well as wider inflationary pressures such as the cost of utilities.

Although building safety measures have increased costs, they significantly enhance the safety of inhabitants and are undeniably a positive step forward.

The use of managing agents will become fundamental to ensuring that residents are getting value for money and are maintaining their building correctly in the Commonhold system, as managing agent selection will be passed from the freeholder to a CA.

This creates the possibility that that those with little experience of issues such as building safety legislation, the management of complex buildings, and the selection of managing agents will now be making decisions.

Ensuring effective building management is paramount to HAs, as in the case where CAs form in blocks where HAs do not hold majority voting rights, HAs must ensure that the building is under skilled oversight. 

The consultation states this in its “Professional management in commonhold developments” section, where it is emphasised that the Bill will increase the role managing agents play in the maintenance of multi-occupancy buildings.

We appreciate MHCLG’s reinstating of their priority to improve standards in the sector and introduce mandatory qualifications for managing agents.

We agree that provisions implementing the remaining recommendations of the Regulation of Property Agents: Working Group be included in the definitive version of this Bill.

Scheme viability issues

The Committee should note that the successful implementation of large‑scale regeneration and development pipelines require a realistic, multi‑year transition timeline for the leasehold ban.

The tenure of a housing scheme is usually fixed at the point planning permission is granted. Because construction and sales cycles often span years, any changes to tenure rules, such as a ban on new leasehold flats, can create major practical challenges.

Large, multiphase developments can take decades from the initial planning consent to the final sale of homes.

This is seen in L&Q’s South Acton Regeneration scheme, which required an overarching masterplan created at the beginning of the development and detailed phase tenure types and development targets.

Since the outline planning application was approved in 2011, L&Q (in conjunction with its joint venture partner, Vistry) has subsequently submitted individual planning applications for around 30+ phases which provide confirmed detail including the design of the buildings and communal areas, the size of the individual properties and the tenure type within that phase.

The first phase started in 2011 and the regeneration does not currently have an end date. The latest phases are due to complete later this year but there are still multiple phases to be built, potentially extending to 2042.

Under the proposed ban, an exception will apply only to schemes where one leasehold flat has been sold. However, applying this rule to schemes where planning was obtained years earlier is problematic.

Many developments include shared communal facilities that were designed around specific tenure mixes, meaning a shift to commonhold could create complex management arrangements between HAs and CAs.

Although developers can begin designing future schemes to avoid such issues, there will inevitably be a transitional period where design changes cannot realistically be made between planning approval and the ban coming into force.

To avoid disrupting long running, multiphase schemes, it is therefore proposed that the ban should have some form of exception for developments underway and particularly multi-phase schemes. 

New build scheme design is likely to change to remove shared facilities between different blocks. This could undermine scheme viability and, in turn, make it harder to meet government housing delivery targets. It may also increase reliance on grant funding to fill emerging viability gaps.

A key example is energy centres: splitting these so that separate centres serve Commonholders and social rent homes would increase construction costs.

However, retaining a single shared energy centre would require strong protections, such as a restrictive covenant in the Commonhold Community Statement (CCS), to guard against the potential for Commonholders from altering its operation in ways that could disrupt supply to other tenures.

Ground rents 

There are circumstances in which L&Q holds a headlease for an entire block and are required to pay ground rent to the freeholder.

In several cases the freeholder is the local authority. We currently pass those ground rent costs on to leaseholders.

We do not profit from this type of arrangement we are just an intermediary for the ground rent to be paid to the freeholder. As we understand the legislation, the ban applies only to ground rents in leases of individual homes.

This would leave us exposed to significant ongoing liabilities under headleases covering multiple dwellings.

We therefore recommend that the ban is extended to include ground rents payable under headleases of whole blocks, to ensure consistency and avoid unintended financial burdens on providers.