The government has announced a ban on new leasehold flats. But how does this affect buy-to-let landlords?
The changes, which the government are calling “a radical improvement on leasehold ownership”, will see all new leasehold flats banned. Further reforms to existing leasehold properties are set to follow.
The proposed changes see a shift from leasehold to commonhold. This would give homeowners (including buy-to-let landlords) greater control over building management. Leasehold properties typically see a third-party making large scale decisions on behalf of property owners. Commonholds would see these decisions made by committee.
A draft setting out the proposed legal framework, known as the Leasehold and Commonhold Reform Bill, will be published later this year. As this is currently only a proposed bill, it could take some time for the changes to become law.
Housing and Planning Minister Matthew Pennycook said: “These reforms mark the beginning of the end for a system that has seen millions of homeowners subject to unfair practices and unreasonable costs at the hands of their landlords and build on our Plan for Change commitments to drive up living standards and create a housing system fit for the twenty-first century.”
You can find out more about the proposed changes on the government website.
What is commonhold?
Commonhold properties are used around the world and were first introduced in the UK in 2002.
Commonhold landlords own the freehold of their individual unit indefinitely, while sharing ownership of the building’s common areas. This differs from owning a leasehold property, where you only own your unit for a fixed period of time.
As a commonhold property owner, you’ll:
- become a member of your building’s commonhold association
- have input on structural, external, and shared areas of the property
- vote as a collective to make decisions about your property
Each commonhold association must have at least two directors. These can be homeowners or hired professionals.
What does this mean for buy-to-let landlords?
A commonhold lease would give buy-to-let landlords more control over their property. Here’s just some of the ways a move to the commonhold system could benefit landlords:
- an indefinite lease term can positively impact the long-term value of your property
- indefinite ownership means more options when looking at investment properties
- setting an annual budget for the building means deciding how much is allocated to upkeep and maintenance
- no ground rent – so you won’t need to increase the rent you charge to cover this (which could make the property more appealing to a wider audience of tenants)
More guides for buy-to-let landlords
- 5 buy-to-let tax changes for landlords in 2025
- Renting out your property: rules for landlords in 2025
- Best buy-to-let areas in the UK for 2025
- Why do I need landlord insurance?
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