The UK government will begin consultations on major reforms to property ownership later this year and plan to ban new rental flats. This marks one of the most significant changes in the real estate industry in decades.
Ordinary ownership is less established, with only 184 properties registered in the UK and Wales, and compared to nearly 4.77 million rental homes in the UK alone, the market is set to take a new direction in how flats are owned and managed. 
(BTL) Shifting normally to buy a landlord presents both challenges and opportunities, affecting everything from ownership to service charging structures, requiring the landlord to reevaluate the management and investment of the property. As the market adapts, mortgage brokers will play a key role in helping landlords navigate legal and financial implications into their future property portfolios.
The end of the leasehold
As part of the Rental and Reform Bill, the government plans to ban new rental flats and begin consultations to explore the right approach. The purpose of this move is to address years of criticism of the leasehold system, which is considered outdated and unfair to homeowners. Securing ordinary ownership reduces ground rents, helping homeowners manage their service charges more strongly, and eliminates many of the pitfalls associated with ownership of leaseholds.
The Ministry of Housing, Communities and Local Government will be releasing the Leasehold and Regular Reform Bill later this year. This is expected to include detailed proposals to convert existing leasehold property and implement changes into the ordinary regime system. The legislation must provide a more equitable property ownership structure, but the transition can still cause short-term uncertainty.
In the current tenancy system, many real estate is owned by third-party landlords known as “freeholders” who own the building, but the lessor purchases the right to occupy the flat within it for a fixed period (usually 99, 125, or 999). The renter is responsible for paying costs such as ground rent and service charges. This is often set by a third-party management company. As a result, they limited control and transparency over these fees, leading to issues such as rising land rents and rising costs of service, which are set to change under the new rules.
Rental hold vs. ordinary
Ordinary property allows flat owners to own and manage the entire building in bulk, while common areas are managed collectively through the ordinary association, allowing for a more collaborative approach to property management.
Land rents are not charged and third party management companies can continue to use them, but ordinary people can take more control over their appointments. There should be less pressure to hand over the rising costs to tenants, as landlords may be less fees. This means that costs can be lower and predictable.
Building management is also managed by a shared ruleset supervised by a committee of property owners. The landlord can become part of that committee, but decisions are made collectively. This implies more transparency and a more collaborative approach to managing properties.
How can a broker support a landlord with ordinary property?
As the real estate market moves towards normal ownership, brokers play an important role in helping landlords understand and adapt to the new structure. By educating clients about how future bans will affect their real estate, brokers can help them make informed decisions about real estate management while building trust with their clients.
The government plans to publish the draft leasehold and ordinary reform bill later this year, and is expected to lay the foundation for wider implementation. Prior to this, the government is also planning to consult about banning the sale of new rental properties, but this will depend on establishing a viable, scalable, ordinary model.
Brokers keeping mortgage changing policies on leaseholds and ordinary property are best positioned to help landlords identify appropriate lending options, restructure their portfolios, and explore investment opportunities in governance development. Brokers can also support clients reassessing risk exposure and long-term investment strategies as the market adapts.
Mortgage brokers have the opportunity to lead in this evolving market as the government aims to be a standard tenure by the end of this parliament. By staying informed, brokers can provide essential guidance to landlords and help them adapt their confidence and future real estate investments.
Jonathan Stington is the head of Coventry's intermediary relationship for the intermediary
