BLOGS

A landmark shift in flat ownership

The King's Speech has confirmed what housing reformers have campaigned for over decades: the end of leasehold for new flats in England and Wales. Under the Leasehold and Freehold Reform Bill, commonhold will become the default tenure for new-build apartments, effectively banning the sale of new leasehold flats and giving flat owners genuine ownership of their homes for the first time.

This is not a minor tweak. REalyse data reveals that 98.97% of all new build flat transactions are currently completed as leasehold, with just 1.03% sold freehold. The average new build leasehold flat sells for £471,135 compared to £198,085 for the rare freehold equivalent—a premium that reflects both location patterns and the complexities of current tenure structures.

The scale of reform: 1.5 million flats in the pipeline

The timing of this reform could not be more consequential. REalyse planning data shows approximately 1.59 million new flat units currently in the development pipeline across England and Wales, with an estimated total scheme value exceeding £350 billion.

London dominates the pipeline with nearly 647,000 flat units across 6,555 approved and pending schemes, representing £190.5 billion in development value. The South East follows with 206,600 units, while the North West shows strong activity with 191,190 units in the pipeline—reflecting the regional cities' ongoing apartment boom in Manchester, Liverpool and beyond.

Every one of these schemes will now need to consider commonhold structures rather than the traditional leasehold model that has underpinned flat development for generations.

Why commonhold changes everything

Under commonhold, flat owners will own their property outright in perpetuity, with no diminishing lease term and no ground rent payable to a freeholder. A commonhold association—owned collectively by the flat owners themselves—manages shared areas and services.

This model, standard in Scotland, Australia, the United States and much of Europe, eliminates several pain points that have plagued English leaseholders:

• No lease extension costs: Current leaseholders face bills of £10,000 to £50,000+ to extend diminishing leases, with marriage value adding to costs as terms fall below 80 years

• No ground rent escalation: Many modern leases contain ground rent clauses that double every 10-25 years, making properties unmortgageable

• Transparent service charges: Commonhold associations must operate on a not-for-profit basis with full transparency to owners

• No forfeiture risk: Freeholders currently hold the nuclear option of taking back properties for relatively minor breaches

REalyse analysis of leasehold flat transactions over the past 12 months shows 155,294 sales across England alone, with London accounting for 48,597 transactions at an average price of £488,513 (£659/sqft). For these buyers—and the millions who came before them—the existing leasehold system remains in place. The challenge now is whether and how existing leaseholders might convert to commonhold.

Regional implications for developers and investors

The shift to commonhold will have uneven impacts across regions. London's high-density, high-value flat market represents by far the largest adjustment, with average scheme sizes of 100 units and prices well above regional averages.

In contrast, regional markets show different characteristics. Yorkshire and the Humber averages 70 units per scheme, while Wales (with 35,303 units in the pipeline) sees smaller schemes averaging 27 units—closer to the community-scale developments where commonhold may prove most straightforward to implement.

For institutional investors, particularly those in the build-to-rent sector, the reforms present both challenges and opportunities. The inability to retain a freehold interest with ongoing ground rent income removes one revenue stream, but greater tenure security for residents could reduce turnover and improve long-term rental yields.

REalyse data shows average leasehold flat prices ranging from £114,587 in the North East to £488,513 in London, with corresponding variations in rental yields. Investors will need to recalibrate their models, but the fundamental demand drivers—population growth, urbanisation and household formation—remain unchanged.

Implementation challenges ahead

The government acknowledges that commonhold has existed since 2002 yet remains virtually unused—fewer than 20 developments have adopted it. The reasons include lender unfamiliarity, developer reluctance to surrender freehold income, and the absence of a critical mass of schemes to establish market norms.

The Bill proposes to address these barriers through:

• Mandatory commonhold for new-build flats, removing developer optionality

• Streamlined conversion processes for existing leaseholders (subject to agreement thresholds)

• Updated guidance for mortgage lenders on commonhold lending

• New dispute resolution mechanisms through a reformed Property Tribunal

Scotland's separate legal system means it already operates under a factoring model closer to commonhold principles. Northern Ireland retains its own leasehold arrangements and is not covered by this reform.

What this means for buyers and the market

For prospective flat buyers, commonhold offers genuine ownership security—no wasting asset, no freeholder disputes, no ground rent surprises. However, the transition period will create complexity. Buyers will need to distinguish between:

• New commonhold flats: Built under the new regime with full ownership rights

• Existing leasehold flats: Subject to continuing lease terms but potentially convertible

• Converted commonhold: Previously leasehold buildings that have transitioned

REalyse valuations and market analysis will become increasingly important during this transition, helping buyers, sellers and investors understand how tenure affects value and identify comparable evidence across the emerging commonhold sector.

The path forward

The leasehold ban represents the most significant reform to English property law in decades. With nearly 99% of new build flats currently sold as leasehold and over 1.5 million units in the development pipeline, the practical implications will ripple through the housing market for years to come.

Developers will adapt their financial models. Lenders will update their criteria. And for the first time, English flat buyers will enjoy the ownership security that most of the developed world takes for granted.

The challenge now moves to implementation—and ensuring that the promise of commonhold delivers genuine improvement for the millions of households who call a flat home.