The UK Government will launch a consultation later this year in a major reform to property ownership, with a plan to ban new leasehold flats. This will mark one of the most significant changes in the property industry in decades.

While commonhold ownership is far less established, with only 184 properties registered in England and Wales, compared with nearly 4.77 million leasehold homes in England alone, the market is set to take a new direction in how flats will be owned and managed.

For buy to let (BTL) landlords, the shift to commonhold brings both challenges and opportunities, impacting everything from ownership rights to service charge structures, requiring landlords to reassess how they manage and invest in properties. As the market adapts, mortgage brokers will play a key role in helping landlords navigate the legal and financial implications to future-proof their property portfolios.

The end of leasehold

As part of the Leasehold and Commonhold Reform Bill, the government is planning to launch a consultation to ban new leasehold flats and explore an appropriate way forward. This move aims to address longstanding criticisms of the leasehold system which has been viewed as outdated and unfair to homeowners. With commonhold ensuring permanent ownership, ground rent will be cut and homeowners will have greater control over service charges, eliminating many of the pitfalls associated with leasehold ownership​.

The Ministry of Housing, Communities and Local Government plans to publish the draft Leasehold and Commonhold Reform Bill later this year. This is expected to include detailed proposals for converting existing leasehold properties and implementing the changes to the commonhold regime. This legislation should provide a fairer property ownership structure, but the transition still has the potential to cause short-term uncertainty.

Under the current leasehold system, many properties are owned by a third-party landlord known as a ‘freeholder’, who owns the building, while the leaseholder buys the right to occupy a flat within it for a fixed term (typically 99, 125, or 999 years). Leaseholders are responsible for paying costs such as ground rent and service charges, which are often set by third-party management companies. As a result, they’ve had limited control and transparency over these charges leading to issues like rising ground rents and high service costs, but this is set to change under new rules.

Leasehold vs commonhold – what this change means for BTL landlords

Commonhold properties enable flat owners to collectively own and manage the entire building, with shared areas managed collectively through a commonhold association, allowing a more collaborative approach to property management.

No ground rent is charged and while third-party management companies can still be used, commonholders will have more control over their appointment. With potentially fewer charges for landlords, there should be less pressure to pass rising costs onto tenants, meaning costs could be lower and more predictable.

Building management will also be governed by a shared set of rules, overseen by a committee of property owners. Landlords can be part of that committee, but decisions are made collectively. This means more transparency and a more collaborative approach to managing the property.

How can brokers support landlords with commonhold properties  

As the property market moves towards commonhold ownership, brokers have a vital role to play in helping landlords understand and adapt to the new structure. By educating clients on how the future ban will affect their properties, brokers can help them to make informed decisions on property management while also building trust with clients.

The government is expected to publish the draft Leasehold and Commonhold Reform Bill later this year, laying the foundation for broader implementation. Ahead of this, the government also plans to consult on banning the sale of new leasehold properties, though this will depend on the establishment of a viable and scalable commonhold model.

Brokers who stay up to date with the changing mortgage policies around leasehold and commonhold properties will be best placed to help landlords identify suitable lending options, restructure portfolios, and explore investment opportunities in commonhold developments. Brokers can also support clients in reassessing their risk exposure and long-term investment strategies as the market adapts.

With the government aiming to make commonhold the standard tenure by the end of this parliament, mortgage brokers have an opportunity to lead in this evolving market. By staying informed, brokers can offer essential guidance to landlords, helping them adapt with confidence and future-proof their property investments. 

Jonathan Stinton is head of intermediary relationships at Coventry for intermediaries