All new houses will be freehold under government plans to phase out the “feudal” leasehold system.
The reforms, set out in a much-delayed Leasehold Bill being drawn up by levelling up secretary Michael Gove, will be introduced in the King’s Speech next week.
The bill is also expected to change the standard contract lease extension from 90 years to 990 years and remove the requirement for someone to have lived in the property for two years before they can negotiate an extension.
It will also give leaseholders more power to manage their building insurance and service charges. The plan has already been backed by leading insurers.
Ministers also plan to cap all existing ground rents to a “peppercorn” rate and will run a consultation process on the issue within weeks, alongside the bill. It is expected to be one of the first pieces of legislation introduced in the new parliamentary session before Christmas.
There are around 10m leaseholders in England and Wales.
In January, Gove said he intended to abolish the leasehold system, describing it as an unfair and “outdated feudal system that needs to go”.
His plans were initially blocked by Downing Street, which believed they were too radical. However, he has now reached a compromise with the prime minister, Rishi Sunak, that insiders say will lead to a gradual phasing out of leasehold properties.
