Government plans to replace leasehold with commonhold could face significant challenges unless ministers address concerns over mortgage lending, building management and conversion costs, property experts warned at the Association of Leasehold Enfranchisement Practitioners (ALEP) annual conference on 14 October.
Key concerns raised at ALEP conference
Property lawyers, valuers, lenders and managing agents examined how the proposed reforms would work in practice. The government’s draft Commonhold and Leasehold Reform Bill aims to make commonhold the default tenure for most new flats and would also simplify the conversion process for existing leaseholders.
Delegates stressed the need for clear legal processes, reliable financing and effective building management.
Conversion costs and mortgage lending
The cost of converting existing leasehold buildings to commonhold remains a major concern. Questions remain over how leaseholders would fund conversions, particularly when some owners cannot afford to participate.
Ministers must also clarify how the new system would treat existing mortgages and development rights. Lenders will need confidence that commonhold properties provide adequate security before offering mortgages. Meanwhile, residents who take control of their buildings must understand their financial and management responsibilities.
ALEP director Mark Chick said: “Commonhold is intended to give homeowners greater control over their buildings. Delivering that opportunity requires coordinated preparation across the property sector, from registering ownership and securing a mortgage to day to day financial and practical management.”
Building management challenges
Delegates also examined the financial responsibilities that come with commonhold ownership. Buildings will still require maintenance, insurance, repairs and compliance with safety regulations, regardless of the ownership structure.
Commonhold associations will therefore need adequate reserve funds, competent management and effective procedures to recover unpaid contributions. The conference also examined how the reforms would interact with outstanding provisions of the Leasehold and Freehold Reform Act 2024.
Representatives from JLL, HM Land Registry, Nationwide and The Property Institute contributed to the discussions. Topics included mortgage lending, enfranchisement valuations, collective enfranchisement and recent case law.
Chick said: “Successful reform must be judged by how it works in individual buildings. Can owners make informed decisions? Can necessary work be funded? Can a buyer obtain a mortgage and understand the building’s financial position?”
He added that ALEP would continue providing practical advice as the legislation develops. The proposals could significantly change how estate agents, conveyancers, mortgage lenders and property managers handle residential transactions. However, delegates highlighted that replacing leasehold ownership alone will not resolve the financial and operational challenges of managing residential buildings.
