Leasehold reform is a necessary step towards fairer home ownership, but rushing changes risks creating uncertainty and instability in the housing market. For landlords, agents, and property managers, understanding the implications of ongoing and proposed reforms is crucial to navigating this complex tenure system effectively.

The need for measured leasehold reform

The leasehold system in England, which affects over 5 million homes, has long been criticised for its complexity and potential for abuse. The Leasehold and Freehold Reform Act (LAFRA), introduced under the previous government, marked a significant move towards improving fairness by reducing premiums for lease extensions and freehold purchases, increasing transparency around service charges, and expanding eligibility for the Right to Manage (RTM).

However, many provisions of LAFRA have yet to be implemented, and further legislation such as the Leasehold and Commonhold Reform Bill is awaited. Rushing these reforms, as was the case with LAFRA, has already caused confusion among leaseholders and other stakeholders. For landlords and agents, this uncertainty complicates property management, valuation, and advising clients.

The importance of stability in leasehold ownership

Leasehold tenure is not a niche arrangement; it accounts for around 20% of England’s housing stock and over 50% in London. It includes various property types such as privately owned flats, shared ownership homes, retirement developments, and mixed-use schemes. These often require complex management structures to function effectively.

Despite its flaws, the current leasehold system provides a framework allowing leaseholders to collectively acquire freeholds and manage their buildings through a no-fault process. This arrangement offers lenders confidence and clear responsibilities for maintenance, which are essential for the safe operation of multi-occupancy buildings. Any reform must therefore be carefully considered and developed through ongoing consultation to maintain market stability.

Challenges arising from the Leasehold and Freehold Reform Act

LAFRA illustrates the tension between reform intentions and practical outcomes. While its principles are broadly welcomed, many of its provisions remain unimplemented or require secondary legislation, leaving professionals such as conveyancers, valuers, and managing agents navigating a transitional and uncertain legal landscape.

For landlords, this means that advising tenants, managing service charges, and handling lease extensions can be more complicated until the new framework is fully established. Additional reforms introduced prematurely risk layering further uncertainty, which could disrupt property management and investment decisions.

Commonhold: promise and practical limitations

The government’s support for commonhold ownership, where flat owners collectively control their building without time-limited leases, is understandable and welcomed in principle by many practitioners. Commonhold has functioned successfully in other countries and offers a potentially simpler and fairer alternative to leasehold.

However, commonhold is not yet ready to replace leasehold on a large scale. It requires significant legal, financial, and cultural adjustments. Mortgage lenders remain cautious, developers have limited incentives to adopt it, and managing agents are more familiar with leasehold processes. A rapid transition to commonhold could hinder housing delivery and unsettle the market, which is a concern for landlords and agents managing existing leasehold properties.

Therefore, reform should be evolutionary, with commonhold tested in new developments, supported by clear guidance for lenders, and introduced over realistic timescales. This approach allows confidence to build gradually rather than imposing abrupt change.

Collaborative reform for a fair and functional system

Effective leasehold reform requires collaboration among government, legal professionals, surveyors, lenders, leaseholders, and landlords. Organisations such as the Association of Leasehold Enfranchisement Practitioners (ALEP) play a vital role by bringing together experts involved in valuation, litigation, and conveyancing within the leasehold system.

A cooperative approach can help avoid a divisive ‘them and us’ dynamic and focus on addressing specific issues such as excessive service charges, opaque management, and exploitative leases. For landlords, this means reforms that improve transparency and fairness without undermining well-functioning leasehold arrangements.

Risks of unintended consequences

From a property investment perspective, poorly managed reform and media-driven scaremongering have already impacted market confidence. Uncertainty around valuation methods, proposals to cap ground rents for valuation purposes, and the unclear future of commonhold have led to cautious behaviour among developers and lenders.

For landlords, this uncertainty can affect property values, financing options, and the ability to manage leasehold properties effectively. It emphasises the need for clear, stable regulations that support sustainable investment and management practices.

Getting leasehold reform right

Leasehold reform is both necessary and welcome, but it must balance ambition with realism. A modern, fair, and transparent system is achievable only through thorough consultation, education, and clear regulation. The industry needs time and clarity to adapt, ensuring that leaseholders have a system that works in practice as well as in principle.

Done well, reform can restore trust, strengthen the housing market, and support growth. Done poorly, it risks destabilising the market for years, which would be detrimental to landlords, agents, and leaseholders alike.

Looking ahead: TLA’s Trusted Partners Hub

The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest to join this initiative, which aims to enhance support and professionalism within the sector.