From obscure 12th century statutes to amusing judicial wigs, there’s much to admire in the gradual development of Britain’s legal order. However, the outdated leasehold system which plagues more than 5m homes in England and Wales is an altogether less charming anachronism. 

To cut a long story short, leasehold is effectively a form of quasi-ownership, in which a tenant buys a home for a set period of time, while a landlord – the freeholder – retains the legal rights to the property. 

As a condition of the lease, tenants pay ‘ground rent’ – this is, in the truest sense, money for nothing, and a classic example of rent-seeking. Ground rent is paid to freeholders automatically and for no clear reason; even the ordinarily cautious Competition and Markets Authority noted that it ‘saw no persuasive evidence… that consumers receive anything in return for ground rent‘ in its response to the Government’s leasehold reform consultation. 

On top of this, leasehold tenants also pay service charges to their landlords. While these four-figure fees are theoretically paid in exchange for general maintenance and upkeep of the property, the reality isn’t always so rosy. The BBC recently highlighted the case of a high-rise block in Bethnal Green, where service charges were hiked by more than 35%, despite persistent leaks and overflowing drainpipes. 

This system might sound absurdly feudal, but about a fifth of homes in England are leasehold properties; for owner-occupied flats, that figure rises as high as 94%. 

In order to address the worst excesses of this arcane system, the Government’s Leasehold and Freehold Reform Bill is seeking to increase the standard lease term to 990 years, reduce ground rent payments to a peppercorn, and require greater transparency over service charges. What’s more, it will also ban the sale of new leasehold houses, meaning that most new homes in England and Wales will be freeholds.