Commonhold Leasehold Reform Bill Explained

The Draft Commonhold and Leasehold Reform Bill: What the Proposed Changes Mean for Property Owners

The Government has published draft legislation that could fundamentally change how residential property is owned and managed in England and Wales.

On 27 January 2026, the Ministry of Housing, Communities and Local Government published the draft Commonhold and Leasehold Reform Bill, describing its proposals as an attempt to end the “feudal leasehold system” and modernise home ownership.

If implemented, the Bill would introduce wide-ranging reforms affecting leaseholders, freeholders, developers and property managers. This article outlines the key proposals and explains what they could mean in practice.

What is the Commonhold and Leasehold Reform Bill?

The draft Bill aims to address long-standing concerns about the leasehold system, including high ground rents, limited leaseholder control and harsh enforcement mechanisms.

It also seeks to revive commonhold ownership, first introduced in 2002 but rarely adopted, by making it the default form of ownership for flats going forward.

At this stage, the Bill is still in draft form and subject to consultation and pre-legislative scrutiny, meaning the proposals may change before becoming law.

Key proposals in the draft Bill

Cap on ground rents for existing leases

Following the Leasehold Reform (Ground Rent) Act 2022 — which removed ground rents from most new long residential leases — the draft Bill proposes extending reform to existing long leases.

Under the proposals:

• Ground rents would be capped at £250 per year
• After 40 years, ground rent would reduce to a peppercorn (effectively zero)
• The changes could come into force from 2028

This proposal is intended to reduce long-term costs for leaseholders and provide greater fairness and transparency.

Making commonhold the default for new flats

One of the most significant proposals is a ban on most new long leasehold flats, with commonhold becoming the default form of ownership.

Under commonhold:

• Each flat owner owns the freehold of their unit outright
• Unit owners automatically become members of a Commonhold Association
• The association owns and manages the common parts of the building

This structure gives owners greater control over how their building is run, rather than decisions being made by a separate freeholder.

Easier conversion from leasehold to commonhold

The draft Bill also seeks to make it easier for existing leaseholders to convert to commonhold.

Currently, conversion requires 100% consent from leaseholders. The Bill proposes reducing this threshold to 50%, potentially making conversion more achievable for many developments.

Removal of forfeiture for lease breaches

Forfeiture has long been criticised as a disproportionate remedy for breaches of lease covenants.

The draft Bill proposes:

• Abolishing forfeiture for breaches of covenant
• Introducing a new enforcement regime
• Granting courts wider powers to impose fairer and more proportionate remedies

The Government has indicated this approach would better balance the interests of leaseholders and freeholders.

Restrictions on estate rentcharges

The Bill also addresses concerns around estate rentcharges, particularly the enforcement powers under the Law of Property Act 1925.

Currently, where an estate rentcharge remains unpaid for 40 days, the rentcharge owner can exercise significant enforcement powers, including registering a lease over the property.

The draft Bill proposes:

• Removing these far-reaching enforcement powers
• Requiring specific notice before enforcement action can be taken

Who could be affected by these proposals?

The proposed reforms could impact:

• Leaseholders under long residential leases
• Freeholders and managing agents
• Developers of new-build flats
• Owners of properties subject to estate rent charges

While the Bill is still at an early stage, those affected may wish to begin considering how the proposed changes could impact their property interests.

What happens next?

The Government has confirmed that the “Moving to Commonhold” consultation is now underway, focusing on how the transition away from leasehold flats would operate in practice.

Much will depend on the outcome of consultation and parliamentary scrutiny, and the final legislation may differ from the current draft.

How we can help

Paige Banks advises leaseholders, freeholders, developers and property professionals on leasehold reform, commonhold ownership and residential property issues.

If you are concerned about how the proposed Commonhold and Leasehold Reform Bill may affect you or your property, or would like advice on preparing for potential changes, please get in touch.