Draft Commonhold & Leasehold Reform Bill Published
On 27 January 2026, the government published the Draft Commonhold and Leasehold Reform Bill. Ministers describe this as the final curtain for the "feudal" leasehold system. For property owners, investors, and developers, this stands as the most significant shift in English property law since the reforms of 1925.
The Bill introduces a statutory ban on new leasehold flats and aggressive retrospective changes to existing leases. If you own a flat, manage a portfolio, or plan to buy, the rules of the game are changing.
Here is what the draft legislation proposes and how it impacts you.
The Ban on New Leasehold Flats
The government’s strategy is clear: stop the flow of new leasehold properties. The Bill prohibits the granting of long residential leases for new flats. Instead, commonhold will become the default tenure.
In a commonhold, you own your unit indefinitely—a true freehold title—and share ownership of the building’s structure and common areas with your neighbours through a Commonhold Association. There is no landlord, no ticking clock on a lease, and no ground rent.
What this means for buyers: If you buy a new-build apartment after the law commences (likely 2028), you will almost certainly buy a commonhold unit. You will vote on maintenance budgets and appoint directors to manage the block, giving you direct democratic control over your home.
Exceptions: The government recognises that some sectors require single ownership. "Build to Rent" (BTR) blocks, where units are rented rather than sold, will be exempt. Shared ownership schemes and social housing will also retain specific lease structures to function correctly.
"Quote from someone in the civil team."
The Ground Rent Cap: A £250 Limit
For millions of existing leaseholders, the most immediate impact comes from Part 3 of the Bill. The government proposes a retrospective "hard cap" on ground rent for existing leases.
How it works:
- The Cap: Ground rent will be capped at £250 per year.
- The Sunset: After 40 years, this cap reduces to a peppercorn (zero).
A Practical Example: Imagine you own a flat with a lease that currently demands a ground rent of £600 per year, doubling every ten years. Under the new law, your obligation drops immediately to £250. The escalating "doubling" clauses become unenforceable regarding any amount over that £250 limit. In 40 years, your payment vanishes entirely.
This measure effectively rewrites millions of private contracts. While this provides huge relief to leaseholders trapped in spiralling costs, it has triggered fierce opposition from pension funds and freeholders. They argue this retrospective interference breaches their human rights under Article 1 of Protocol 1 (A1P1) of the European Convention on Human Rights. We anticipate a significant legal battle in the courts, which could delay implementation.
Abolishing Forfeiture: No More "Nuclear Option"
Currently, if you fail to pay service charges or breach a lease covenant, your landlord can threaten "forfeiture"—ending your lease and taking the property, potentially leaving you with nothing. This applies even if the debt is small compared to the property's value.
The Bill abolishes forfeiture for long residential leases. It replaces this archaic remedy with a Statutory Lease Enforcement Scheme.
Under the new system, disputes move to a Tribunal. If the Tribunal orders the property sold to settle a debt, the process resembles a mortgage repossession: the property is sold, the debt is paid, and the remaining equity returns to you. This safeguards your capital and prevents landlords from receiving a windfall at your expense.
Unlocking Commonhold Conversion
The Commonhold and Leasehold Reform Act 2002 failed because converting an existing building required 100% agreement from leaseholders—a near-impossible target.
The 2026 Bill drops this threshold dramatically. In the future, you will need the consent of only 50% of qualifying leaseholders to convert your building to commonhold.
The "Hybrid" Solution: What happens if you want to convert, but your neighbour does not? The Bill allows for "hybrid" buildings. The 50% who vote "yes" become commonhold unit owners. The non-consenting neighbours retain their leases, but their rights are "harmonised" so they can still vote in the Commonhold Association. Over time, as those leasehold units are sold, they must convert to commonhold, ensuring the leasehold tenure eventually dies out.
What Should You Do Now?
We are currently in a "twilight zone." The Bill has been published, but it is not yet law. We expect the primary measures to come into force around 2028, but market behaviour will change immediately.
- Leaseholders: If you have a short lease, seek advice. Extending now incurs "marriage value" costs, but waiting for the new regime carries the risk of delay or legal challenges.
- Investors: Review your portfolios. The value of freehold reversions and ground rent income streams faces a statutory downgrade.
This legislation signals the end of a centuries-old system. While the transition will be complex and legally contested, the direction of travel is irreversible.
