The landscape of property ownership in England and Wales is on the cusp of transformative change. With the draft Commonhold and Leasehold Reform Bill published, the sector must begin preparing for what lies ahead. The consultation on banning leasehold for new builds is now live, with responses due by 24 April 2026.
This shift towards commonhold represents one of the most significant changes in the property market in a generation. For homeowners, it promises greater control over their flats and more transparency in their expenditure. For developers and investors, it prompts a structural rethink.
History tells us that sector-wide changes of this magnitude often come with a "blip" – often delaying delivery and, in some cases, investment. Sometimes, this is not due to uncertainty, but rather a lack of preparation. Legal documents are redrafted and commercial operations are swiftly reworked. The advantage we have now is time. Whilst we are a while away from legislation coming into force, the direction of travel is clear.
Leasehold structures are frequently used in both development and funding models across the market. The attention from pension funds and other institutional investors in the affordable housing sector has been seismic in recent years, and significantly more investment is expected.
While the implementation of any new legislation is likely to be a staged process, those investors looking to deploy funds now should certainly have an eye to the future. Now may be the time to re-think models that rely heavily on leases, including typical income strips and management leases. Preparation will be key to ensuring a smooth transition and maintaining the flexibility needed to preserve existing commercial arrangements.
Key considerations for the housing sector
- Lease-based income strips – is there an alternative way for investors to secure their return?
- Direct lettings by the investor – do investors want to be the direct landlord of tenants, or further, could they be? Affordable tenants would not want an unregulated body as their landlord.
- Grant funding – some delivery is contingent on the availability of grant funding, but in such cases, the landlord of tenants must be a Registered Provider.
- Regulatory status – how will the regulatory framework adapt to commonhold structures, particularly in the affordable housing context?
- Conversion rights – even where leasehold bans are not in effect, the commonhold legislation is intended to provide leaseholders with a route to acquire a commonhold interest in their unit, with only 50% of leaseholders in a block needing to vote in favour. In mixed tenure blocks, how can investor structures be protected as minority or non-consenting leaseholders?
- Tax efficiency – some of these structures are driven by tax and any new structure will need to be reviewed with such efficiencies in mind.
The time to review is now. By engaging with the consultation process and reviewing existing structures, investors and developers can position themselves to navigate this transition successfully. Those who prepare early will be best placed to capitalise on the opportunities that commonhold reform presents.
