Commonhold reform and what it means for mortgage brokers – Rudolf

The proposal forms part of the wider Draft Commonhold and Leasehold Reform Bill and follows a long period of policy work aimed at ending the long-standing issues associated with leasehold ownership and the cost and management of maintenance of shared amenities.

The consultation asks industry and consumers how the ban should work in practice, what exemptions may be needed, and how quickly the market could move to a commonhold model. The intention is that, once the legal framework is in place, new flats should normally be sold as commonhold rather than on long residential leases.

For those working across the property transaction chain, including mortgage brokers, this is not simply a legal change affecting conveyancers. It represents a shift in how flats are owned, financed and managed, which will shape the structure of transactions for years to come.

A positive response

The Conveyancing Association (CA) has responded positively to the consultation and supports the direction of travel towards commonhold becoming the standard structure for new flats. Our members deal with the practical consequences of leasehold complexity every day, so there is a clear recognition that reform is needed if transactions are to become simpler and more predictable.

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The CA supports the broad scope of the proposed ban on new leasehold flats across purpose-built developments, conversions of houses into flats, and buildings converted from commercial use where flats are sold. At the same time, we have stressed that clarity will be essential, particularly around definitions, lender requirements and Land Registry processes.

We have also highlighted the importance of transitional arrangements and preparation time. Moving an entire market away from leasehold structures will require new documentation, updated case management systems, lender guidance and significant professional training. Our view is that the sector will realistically require around two years to prepare for full adoption once the final framework is confirmed.

Why this matters for mortgage brokers

For brokers advising clients purchasing flats, commonhold has the potential to remove a number of long-standing issues that currently complicate lending decisions and delay transactions.

One of the most obvious benefits will be the gradual removal of ground rents and reducing lease terms from the equation. Leasehold properties can raise lender concerns where ground rent clauses escalate or where the lease term has fallen below certain thresholds. These issues frequently require additional legal checks or lender approval and can sometimes lead to delays with post-valuation queries and mortgage offers being reconsidered late in the process.

Commonhold ownership removes that structure because each homeowner owns their property outright without a diminishing lease term or a landlord collecting ground rent. In practice, this should simplify underwriting and reduce the delay caused by legal scrutiny of lease provisions.

A simpler title structure across the transaction chain

There are also likely to be benefits across the wider transaction process with standardised commonhold templates and unit owners’ choice of managing agent. Leasehold and managed freehold transactions often involve layers of documentation and third-party consents, particularly in relation to managing agents, landlords, management companies, estate rentcharge owners or residents’ associations.

The draft reforms are intended to simplify these arrangements and modernise some of the more problematic elements of freehold estates. For example, other proposals include changes to how estate rentcharges are enforced, which should remove some of the delays caused by protection clauses and lender requirements.

For brokers, this matters because those issues frequently emerge late in the transaction process, often when the conveyancer is reporting to the lender. When they arise, they can extend completion timelines or increase the risk of a transaction falling through.

Preparing for a different flat ownership model

None of this means commonhold will remove all challenges from communal living or property management. Disputes about costs, repairs or governance will still arise in shared buildings, just as they do today in leasehold blocks or right-to-manage structures.

However, the shift away from a landlord-tenant model towards a system where owners collectively manage their building, helped by property managers of their own choosing, represents a significant structural change.

For brokers and lenders alike, the key point is that the legal foundation of flat ownership in England and Wales may soon look very different.

As the consultation progresses and the draft legislation moves through scrutiny, mortgage brokers should begin to familiarise themselves with commonhold because, in the near future, it may become the structure behind a large proportion of the flats their clients are buying.