What new leasehold reforms mean for the property market: Mark Manning

Sadly, the approach of the few has ruined it for those who take an honest and fair approach and act in the right way, and quite rightly, the Government has sought to intervene.

A draft Leasehold and Commonhold Reform Bill is set to be published later this year, which will outline how the proposed new system will work, and I think it has the potential to be hugely advantageous for the property market by making it fairer for all.

It will ensure that owners of new flats and apartments can take charge of how their buildings are managed and ensure they are never faced with unfair increases to management costs that they can’t afford, and which are so prohibitive that they make their properties unsellable.

Under the new rules, leaseholders of newly built apartments and flats will be able to choose who manages and maintains their buildings and grounds and agree on the costs to do so. Essentially, it will ensure that these leaseholders are no longer at risk of abuse through the system and make them masters of their own destinies. It will also help to foster a stronger sense of community amongst leaseholders in the same buildings as everyone will need to work together as a collective.

To ensure the proposed rule changes are beneficial, it’s imperative that they are well thought out and receive the buy in of key stakeholders, particularly mortgage providers who must be satisfied that there’s conditions in place to ensure commonhold buildings are maintained to a minimum standard.

Without this, there’s a risk that mortgage companies won’t provide mortgages for commonhold owned properties as if buildings aren’t properly maintained they could decrease in value.

To negate this, lenders need to be involved in the process of creating the new framework and work with the Government to ensure there are clear conditions in place to ensure owners of new flats and apartments legally commit to maintain their building to a pre-agreed level.

Get the lifestyle tips you need with our specially-curated newsletter

There also need to be clear rules in place about what happens if there’s conflict between different owners in the same building, and there should be clear guidelines around conflict resolution and majority rules.

Changing from a leasehold system to one that’s more similar to commonhold will be complex, but if the Government consults with the right stakeholders to create a robust system, it will make property ownership more equal.

One group the proposed reforms don’t cover is leaseholders living in existing buildings, and despite changes that have recently become law through The Leasehold and Freehold Reform Act 2024, more needs to be done to ensure owners of all flats and apartments have the same rights.

Owning a property should provide security, and by ensuring all homeowners have more control over the buildings their homes are in, it will protect the value of these properties and improve the performance of the property market as a whole.

Mark Manning is managing director of Manning Stainton estate agents, based in Leeds