Future-proofing Buy to Let investments: the end of leasehold flats
April 2025
The government’s legislation to ban new leasehold flats, expected in the second half of 2025, marks a major shift in property ownership, replacing leasehold with commonhold.
In 2024, there were just 184 properties registered as ‘commonhold’ within England and Wales, less than 0.01% of the total number of properties in the same area1. By comparison, leasehold represents a larger part of the market – there are an estimated 4.77m dwellings in England alone, accounting for nearly a fifth (19%) of the total housing stock2.
This new legislation will apply to new leasehold flats, marking a huge transformation for housing. For Buy to Let (BTL) landlords, this change presents both challenges and new opportunities, so understanding these shifts will be crucial for brokers to help clients understand how to future-proof property portfolios.
The leasehold ban – what’s changing?
Under the Leasehold and Commonhold Reform Bill expected later this year3, the government plans to ban new leasehold flats and transition to commonhold ownership, giving flat owners direct control over building management.
With commonhold ensuring permanent ownership, ground rent will be cut and homeowners will have greater control over service charges, which have long been a burden for leaseholders. The legislation put in place this year should provide a fairer property ownership structure, but the transition still has the potential to cause short-term uncertainty.
What does this mean for BTL landlords?
In the current leasehold system, many properties (especially flats) are owned by a freeholder, and leaseholders will pay for services including ground rent and service charges for building maintenance and insurance. Often set by third-party management companies, leaseholders have had little control or transparency over the charges, and in the past ground rent has increased over time, sometimes dramatically – but this is set to change under new rules.
Under commonhold, every flat or unit owner will own their property outright, with shared areas managed collectively through a commonhold association. 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 and associated costs will also be governed by a clear set of rules, overseen by a committee made up of property owners. Landlords may be part of this, but decision-making will be shared among all stakeholders to ensure transparency. This should provide homeowners with a stronger voice in how their building is run, leading to more collaborative management practices.
How can brokers support landlords with commonhold?
Brokers have a key role to play in supporting landlords in the transition from leasehold to commonhold properties. 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 and fostering strong relationships with clients.
Staying up to date on evolving mortgage policies around leasehold and commonhold properties will be crucial to ensure that landlords have access to the most suitable financing options based on their own financial circumstances and goals. Brokers can also pinpoint growth areas, such as commonhold-friendly developments, to help landlords stay ahead of emerging property trends.
In the second half of 2025, the government will publish a draft Bill for pre-legislative scrutiny, enabling the government to test the proposed commonhold model. Property agents and lenders are expected to adapt their business practices ahead of the delivery of commonhold at scale. As part of this reform, the government will also consult on banning the sale of new leasehold properties later this year, but a viable commonhold model will need to be established first.
With the government aiming to establish commonhold as the standard tenure by the end of this current parliament, brokers who stay ahead of policy changes and shifts for this sector can provide valuable insights to landlords navigating this new market.
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