The End of Leasehold Flats? Understanding the Impact of Reform on the Buy to Let Mortgage

The Commonhold and Leasehold Reform Bill is changing the game for landlords. Discover how the leasehold ban and £250 ground rent cap affect buy to let mortgage eligibility and lender criteria.

May 13th, 2026

The landscape of property ownership in England and Wales is on the brink of a pretty seismic shift. For decades, the leasehold system has been a standard yet often contentious framework for flat owners and buy to let mortgage borrowers.

However, the proposed Commonhold and Leasehold Reform Bill aims to dismantle this status quo by banning leasehold for new-build flats and introducing a £250 annual cap on ground rents.

For Buy-to-Let (BTL) investors, these changes are more than just administrative updates – they represent a fundamental shift in how their residential assets are valued, managed, and what interests us most – how they are financed.

The Shift to Commonhold

By transitioning new-build flats to “Commonhold,” the government is moving toward a model where residents own the freehold of their individual units and collectively manage the building.

It sounds good, but as with most plans there will be unintended consequences.

For a buy to let landlord, this removes the “ticking clock” of a lease extension and eliminates the risk of escalating ground rents – good news.

However, it also means that landlords will need to be more active in resident associations or management companies, as the responsibility for the building’s upkeep falls directly on the unit owners rather than a distant freeholder. On top of the Renters Reform Bill, this may be another thing landing on a landlord’s shoulders and shifting the market toward the professional landlord.

The £250 Ground Rent Cap: A Win for Affordability and Lending

One of the biggest hurdles in recent years for Buy to let mortgage applications has been “onerous” ground rent clauses. Many lenders historically refused to provide finance for properties where ground rent doubled every 10 or 15 years, or where the rent exceeded 0.1% of the property value.

Buy to let mortgage lenders have been cautious about being responsible for these costs to avoid forfeiture in the event that a mortgage defaults.

By capping ground rents at £250 per year, the Bill brings much-needed standardisation. This cap prevents properties from falling into a legal quirk where high ground rents could technically allow a freeholder to repossess a property, a risk that has always made buy to let mortgage lenders nervous.

How Will Lenders Respond?

While the Bill is designed to protect consumers, the lending industry will need time to recalibrate. We anticipate several key shifts in the buy to let mortgage market:

Simplified Criteria: Lenders will likely streamline their requirements for new-build flats. Without the need to scrutinise complex lease terms or ground rent review patterns, the “offer-to-completion” timeline could shorten. Something every buy to let mortgage borrower will be grateful for.
Valuation Stability: Properties with capped ground rents are seen as lower-risk assets. This could lead to more stable valuations, particularly for secondary-market flats that were previously “blighted” by high ground rents.
Refinancing Opportunities: For existing landlords with leases that fall under the new cap, refinancing may become easier as more lenders become comfortable with the standardised terms, it means refinancing your buy to let mortgage could be more straightforward.

So what does it all mean?

“This reform is a double-edged sword for the mortgage market,” says David Farmer of Lime Finance Solutions. “While the ban on new leaseholds simplifies the long-term outlook, the transition period is crucial. Lenders are already looking closely at how commonhold associations will be structured to ensure there is professional management in place. For the savvy investor, this represents a significant opportunity to acquire assets with far more predictable overheads.”
There is of course the period of buy to let mortgage lenders finding their feet, we may see some period of adjustment where access to finance becomes a little more long winded, that said – it shouldn’t last long.

FAQ

Will this affect my existing leasehold BTL property?

The ban on new leaseholds typically applies to new properties moving forward. However, the ground rent cap and improved rights for lease extensions are intended to provide relief to existing leaseholders.

Is Commonhold harder to get a mortgage on than Leasehold?

Currently, many lenders are more familiar with Leasehold. However, as the Bill becomes law, lenders will update their policies to treat Commonhold as the new standard. It is vital to work with a broker who understands which lenders are “Commonhold-friendly.”

Will the cap on ground rent reduce the value of my property?

For most landlords, the answer is no. In fact, properties with high ground rents often suffer from lower resale value because they are harder to mortgage. A cap of £250 makes the property more “mortgageable” and should be more attractive to future buyers.

Does this change who pays for building repairs?

Under Commonhold, the “Commonhold Association” (made up of the owners) is responsible for repairs. While you won’t pay “ground rent” to a landlord, you will still pay service charges into a communal fund to maintain the building. Watch this space on how it affects reserve funds and repairs.

When should I talk to a broker about these changes?

If you are planning to purchase a new-build flat or refinance an existing one, now is the time. With a buy to let mortgage, or any borrowing, the earlier is always the bett. The transition period can create “grey areas” in lender criteria, and professional advice will be more essential to navigate the changing requirements.

At Lime Finance Solutions, we specialise in helping investors navigate the complexities of the buy to let mortgage market. If you’re concerned about how the Reform Bill affects your portfolio, get in touch today.

David Farmer

Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.