Beyond the Bill: The journey to Commonhold starts here

On 27 January 2026 the government published the draft Commonhold and Leasehold Reform Bill, together with Explanatory Notes, that describe the intended legal and policy effect of the draft provisions. The package of reforms is aimed at (i) reshaping the future of home ownership model for flats by strengthening commonhold and (ii) changing key economic and enforcement features of long residential leases.

The Explanatory Notes make clear that these reforms are intended to tackle well-recognised issues in the current leasehold system and to provide a coherent modern legal framework for both leasehold and commonhold tenure going forward.

Key changes and provisions

Capping ground rents

One of the principal protections advanced under the Bill for existing leaseholders is the introduction of a statutory cap on ground rents. Under the Bill ground rents will be capped at £250 per year and 40 years from the effective date of the cap, those ground rents will convert to a peppercorn (effectively nil).

This change is intended to address the widely reported issue of escalating and unusually onerous ground rents, sometimes doubling every five or ten years and impeding both affordability and marketability of the leasehold property.

Abolition of forfeiture and enforcement reform

The Bill will abolish the existing system of lease forfeiture for residential leases, described in the Explanatory Notes as a “draconian system” that can lead to disproportionate loss of property. In place of forfeiture, the Bill seeks to introduce a new, fairer and more proportionate lease enforcement scheme for leaseholders and landlords alike. Likewise, enforcement powers relating to estate rentcharges on private freehold estates will be reformed, with outdated remedies removed.

Reinvigorating commonhold

The Bill repeals and replaces Part 1 of the Commonhold and Leasehold Reform Act 2002 with a new statutory framework intended to make commonhold fit for purpose in contemporary residential development. The updated regime is intended to provide a clearer, more accessible commonhold model, removing ambiguities and addressing limitations that have historically impeded its uptake.    These include providing greater flexibility for mixed-use developments and introducing clearer financial and dispute resolution mechanisms.  The Bill also seeks to simplify the process of converting to commonhold simpler and fairer, reducing the current requirement for 100% unanimity on conversion to 50% in line with the threshold for collective enfranchisement claims under the Leasehold Reform, Housing and Urban Development Act 1993.

Structure of the Bill

The Bill is divided into six Parts and 14 Schedules, covering:

1. commonhold reform,
2. restrictions on new leasehold flats (including the foundation for future consultation on banning leasehold for new flats),
3. ground rent,
4. enforcement of long residential leases,
5. estate rentcharges, and
6. general provisions.

The Bill aims to balance consumer protection with tenure sustainability and is intended to be considered alongside the wider leasehold reform programme.   However, for many landlords and investors, the Bill’s reforms represent significant shifts in tenure fundamentals and enforcement rights, the most controversial of which is likely to be the retrospective capping of ground rents.  For landlords and pension funds holding freehold reversions, the likely market impact is the revaluation of portfolios where value is underpinned by ground rent yields and enforcement leverage.  On some assessments, an estimated £7bn will be wiped off the value of such assets raising the spectre of a further round of judicial challenges from aggrieved investors as seen in R (ARC TIME Freehold Income Authorised Fund & Others) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 (Admin) late last year.

Consultation: banning new leasehold flats

The government has also launched a consultation entitled “Moving to commonhold; banning leasehold for new flats” the response period for which ends on 24 April 2026. This seeks views from industry and consumers on questions relating to scope, exemptions, timings, transitional arrangements, and the wider commonhold legal framework.

The publication of the draft Bill and consultation moves the debate from policy signalling to legislative scrutiny, and the headline proposals are clear. What matters now is not only how these evolve through consultation and pre-legislative review, but how effective implementation and transitional arrangements prove to be. The process could take many months to complete and the timing remains uncertain.

The reforms build on action currently being undertaken by the government to implement the Leasehold and Freehold Reform Act 2024, including increased transparency over service charges so that leaseholders can better hold their landlords to account. The Bill heralds a new era in home ownership and provides a framework against which landlords, investors, developers and consumers alike may assess value, risk and future investment opportunity – but while the roadmap is emerging and the direction of travel is clear, we have barely started the journey. Prepare to buckle up.

How we can help

For further information and guidance visit our Leasehold and Freehold Reform hub.