Landlords could become a thing of the past when commonhold, a new form of tenure, is introduced in three weeks' time.
With commonhold, owners band together to form an association that draws up rules on how interdependent properties, such as flats in a block, will be managed. And unlike leasehold, there is no need for landlords.
The Council of Mortgage Lenders says that the biggest advantage of the commonhold idea for both owners and lenders, is that the value of a property will not fall because of the uncertainties created by a shortening lease.
But the biggest problem with commonhold is for leaseholders and the effect that the length of lease can have on the value of a property. Another problem is the difficulty in checking whether a leasehold property providing security for a mortgage is adequately insured and whether the landlord has assumed the responsibility for arranging insurance.
Brad Baker, head of communications at The Mortgage Code Compliance Board, says: “Good advisers will have to be aware of the changes that commonhold brings but it won't affect the mortgage advice process, and should not affect people's mortgages in any way.”
The CML is currently re-drafting its lenders' handbook which provides comprehensive instructions for solicitors acting on behalf of lenders in residential transactions.