Leasehold Homes Will Be “Harder to Sell’, Warns Lawyer

Why It Matters

The shift could depress leasehold property values, tighten mortgage lending, and reshape the UK housing market.

Key Takeaways

• Government aims to ban new leasehold flats in England, Wales
• Lawyer warns leasehold homes may become harder to sell
• Proposed bill could create two‑tier market favoring commonhold
• Existing leaseholders risk losing ground‑rent investment value
• Industry calls for phased rollout over 7‑10 years

Pulse Analysis

The UK’s long‑standing leasehold system is under renewed scrutiny as the government pushes a transition to commonhold ownership. Launched in January, the “Moving to commonhold” consultation seeks to ban new leasehold flats for new builds, positioning commonhold as the default model for future developments. While the policy aims to eliminate problematic ground‑rent clauses and improve consumer protection, it also introduces a structural shift that could destabilise the existing leasehold market, which still accounts for a sizable share of residential stock across England and Wales.

Industry experts, led by Forsters’ counsel Caroline Wild, warn that the draft legislation may inadvertently create a two‑tier property market. Existing leasehold units could be perceived as inferior, reducing their resale appeal and complicating mortgage underwriting. Lenders may tighten criteria for leasehold loans, and owners who have invested in ground‑rent purchases could see the value of those assets erode sharply. The potential devaluation poses risks not only for individual homeowners but also for broader financial institutions with exposure to leasehold‑backed mortgages.

To mitigate these unintended consequences, stakeholders are urging a phased implementation over the next seven to ten years, coupled with clear mechanisms for converting existing leaseholds to commonhold or offering compensation pathways. Such a gradual approach would give the property sector time to adapt, educate consumers, and develop the legal infrastructure needed for a seamless transition. If executed thoughtfully, the reform could deliver long‑term benefits—greater transparency, reduced disputes, and a more resilient housing market—while safeguarding the interests of current leaseholders.