Labour’s Commonhold Reforms: What London Landlords Need to Know Now

Why Commonhold Reform Matters to Landlords

The Labour government has pledged to end the sale of new leasehold flats and replace leasehold ownership with a commonhold model within the current parliamentary term. The aim is to tackle long-standing issues with leasehold properties, including excessive service charges, poor building maintenance, and short lease terms that threaten occupant stability.

For private landlords — especially those owning flats or HMOs — this signals a significant shift in property ownership and management structures. Unlike leasehold, commonhold confers freehold-style ownership of individual units alongside shared ownership of common areas, potentially offering greater control and transparency.

Practical Implications: Benefits and Concerns

Benefits:

• Lower Service Charges: By cutting out some management middlemen, commonhold could reduce ongoing costs.
• Improved Building Maintenance: Collective ownership incentivises better upkeep, potentially enhancing asset longevity and tenant satisfaction.
• Longer Occupant Retention: With freehold-like security, tenants and landlords may benefit from longer tenancies and less frequent renegotiations.

Concerns:

• Management Risks: Commonhold requires effective governance by unit owners. Poor organisation or disputes can lead to management paralysis.
• Unanimous Consent Requirement: Many decisions need unanimous agreement among commonhold members, which can be difficult to secure.
• Financial Liquidity: Commonhold entities must maintain sufficient reserves to cover maintenance and repairs. Landlords will need to assess their financial readiness.

What Different Landlord Profiles Should Consider

• Single-Unit Landlords: May find commonhold simpler to manage but should review the new governance responsibilities.
• HMO Owners: Should evaluate how commonhold affects shared space management and tenant agreements.
• Portfolio Landlords: Need to map which properties will transition and prepare for varied commonhold rules across developments.
• Accidental Landlords: Should seek advice to understand how reforms impact their obligations and property value.

Steps to Take Now

1. Monitor Legislative Developments: Government white papers and draft bills will clarify timelines and detailed rules. Rentals & Sales will provide updates as they emerge.
2. Review Leasehold Portfolios: Identify properties affected by the ban on new leasehold sales and those likely to convert to commonhold.
3. Assess Financial Resilience: Ensure reserves are adequate to meet maintenance and repair costs under collective ownership.
4. Communicate with Tenants and Stakeholders: Prepare tenants for possible changes in ownership and management structures to maintain trust.
5. Consult Legal Advisors: Understand consent requirements, governance structures, and implications on rent-setting and lease terms under commonhold.

Looking Ahead

While the government aims to implement reforms within this parliamentary term, some landlords remain sceptical about delivery speed and practical outcomes. However, proactive preparation will minimise disruption and position landlords to capitalise on potential benefits.

How Rentals & Sales Can Support You

Our landlord intelligence hub offers portfolio reviews tailored to commonhold impacts, compliance audits to ensure readiness, and pricing strategy advice aligned with changing ownership models. Contact us to schedule a consultation and safeguard your investments through these reforms.

Compliance Disclaimer: This article provides general information and does not constitute legal advice. Landlords should consult qualified professionals regarding specific circumstances and legislative updates.