The UK property investment landscape is on the cusp of significant change as leasehold reform takes hold, impacting buy-to-let landlords, freehold investors, developers, and lenders across England's 4.90 million leasehold dwellings. The shift in power towards residents will redefine risk and opportunity for those with a stake in the market.
London's 39% of leasehold properties lead the way, followed by the North West at 30%, with approximately 1.91 million privately owned and let within the private rented sector. As uncertainty surrounding leasehold continues to influence investment decisions and property valuations, investors must navigate these uncharted waters carefully.
The Leasehold and Freehold Reform Act 2024 has started to simplify the process for leaseholders to acquire Right to Manage (RTM). Since 3 March 2025, non-residential RTM claims can now include up to 50% of a building's residents, bringing more mixed-use developments within its scope. Leaseholders no longer need to cover their landlord's professional costs associated with an RTM claim, altering the risk profile for investors.
A well-managed RTM company can lead to improved maintenance standards and greater transparency, ultimately benefiting property value. However, issues like service charge disputes, neglected repairs, and poor record-keeping can significantly damage saleability and mortgageability. Investors should assess not only whether a building has RTM but also the competence and financial discipline of its management.
Commonhold's adoption in new schemes will likely diminish or eliminate traditional income streams associated with leasehold, such as ground rent and certain freehold interests. Investors relying on these sources will need to adapt, while commonhold's success could enhance liquidity in areas where leasehold has been a deterrent by boosting buyer confidence in flats.
The flat market faces various pressures, including mortgage affordability and service charge concerns. As the UK property landscape evolves under leasehold reform, investors must stay informed about these changes to make informed decisions. Understanding Right to Manage and commonhold's implications is crucial for those with a stake in this shifting market.