The Intermediary – March 2026 - Flipbook - Page 24
RESIDENTIAL
Opinion
Commonhold
people need support
and solutions
A
er years of debate,
the future of
leasehold is becoming
clearer. Several pieces
of dra legislation
are currently in the
pipeline, with the dra Commonhold
and Leasehold Reform Bill now firmly
on the table.
The Government’s intention is to
reform the commonhold model to
make it easier for existing leaseholders
to convert to commonhold. The
Bill also proposes to ban the use of
leasehold for most new flats.
Alongside this, two consultations
are underway. The first – now closed
– is primarily focused on managing
agents and service charge protections,
touching on issues relevant to the
management side.
The second – open until 24th April
2026 – considers how the transition
to making commonhold the default
tenure will work in practice.
This represents more than a
technical adjustment to housing
law. It marks a deliberate aempt to
change the ownership model for flats,
and with it, the way value, risk and
security are assessed.
At the same time, leasehold will also
be reformed – capping ground rents,
abolishing forfeiture and tightening
the framework around charges.
The hope is to improve fairness for
consumers. For lenders, however,
the central question is whether
they also support accurate and
reliable valuations of the assets they
lend against.
At a structural level, commonhold
changes the nature of the asset.
Instead of a time-limited
leasehold interest, the borrower
owns a perpetual interest in a unit,
coupled with shared ownership and
governance of the common parts.
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The Intermediary | March 2026
From a valuation perspective, that
removes the familiar variable of
lease length, which has long driven
lending thresholds. In principle, a
non-wasting asset should be easier
to value and easier to lend on over
the long-term.
In practice, however, the removal of
lease length does not eliminate risk. It
redistributes it. The focus for valuers
inevitably shis towards governance,
financial discipline and long-term
maintenance. Under commonhold,
service charges are replaced by
commonhold assessments set and
enforced collectively by unit owners.
The strength of the commonhold
association, the clarity of its rules, the
realism of its budgets and its ability
to enforce contributions all become
central to market value.
Relevant to risk
These are factors that lenders will
increasingly expect to see interrogated
in valuation reports. The parallel
reforms aimed at strengthening
protections over charges and services
are therefore highly relevant to
valuation risk.
By capping ground rents, abolishing
forfeiture and tightening cost
transparency, the Bill seeks to stabilise
cashflow assumptions for existing
leasehold properties.
From a lender’s perspective,
this should improve confidence in
affordability and reduce the risk of
value volatility driven by opaque or
escalating charges. It also narrows the
behavioural gap between leasehold
and commonhold in terms of
ongoing cost risk.
One of the most immediate
challenges for valuers, however, will
be the transition period. For many
years, leasehold and commonhold
flats will coexist in the same
STEVE GOODALL
is managing director at e.surv
developments, the same postcodes and
sometimes the same blocks.
Comparable evidence will be thin,
particularly in the early phases of
commonhold adoption. Surveyors
will need to rely on professional
judgement. Lenders, in turn, will
need to be comfortable that valuation
methodologies are evolving in
step with tenure reform, rather
than lagging.
The proposed abolition of forfeiture
is another area where valuation
assumptions will need to adjust.
While forfeiture has long been seen
as draconian, it has also functioned as
a blunt enforcement mechanism.
Its replacement with a court-based
process should improve fairness, but
valuers and lenders will need clarity
on how effectively arrears can be
enforced in practice.
None of this suggests that
commonhold is inherently
problematic from a lending
perspective. On the contrary, a welldesigned commonhold system has the
potential to produce assets that are
simpler and more transparent than
traditional leaseholds. But the success
of the reform will ultimately depend
on implementation.
Valuation sits at the heart of
that confidence. If surveyors
can consistently evidence that
commonhold properties are wellgoverned, lender appetite will follow.
Understanding how valuers are
assessing commonhold risk, what
information they are relying on and
where uncertainty remains will
be critical. Ensuring that reforms
translate into reliable valuations will
be the test of whether policy intent
becomes market reality. ●
