Sweeping reforms proposed in draft Commonhold and Leasehold Reform Bill

In January 2026, the government published a draft Commonhold and Leasehold Reform Bill, and an accompanying consultation. If enacted, the proposed reforms will have a fundamental impact on how ownership of residential property will be structured and managed. The changes will be of interest to all those involved in the long residential leasehold market, from developers to those who invest in residential assets, including as part of mixed-use properties.

Key provisions of the draft Commonhold and Leasehold Reform Bill

• Reinvigorated commonhold regime - A new framework for commonhold ownership is proposed; repealing the existing and scarcely used 2002 regime. In general terms, commonhold is a form of freehold ownership with no time limit. Typically, the owner of a flat is a “unit holder” and is also a member of a commonhold association which owns and manages the common parts of the property. Through the association, the unit holders, rather than a landlord, decide how to manage the property. The operation of the new commonhold model will be the subject of consultation and most of the detail of the proposed new structure will be contained in later regulations, but the reforms are intended to address the practical difficulties currently associated with commonhold. For example, provisions will be included for “commonhold sections”, to accommodate mixed-use schemes, and it will be easier for existing leaseholders to voluntarily convert their buildings to commonhold
• Ban on new long leases of flats – The draft bill includes a planned prohibition on the grant of long residential leases of flats. Commonhold will become the default tenure for the “vast majority” of new residential flats.  As with the proposed commonhold model, much of the detail remains to be seen. Most notably, the prohibition will be subject to, as yet mostly unspecified, exceptions. Although it has been proposed that purpose-built rental blocks including social rented housing and student accommodation will be excluded from the ban.  The government has confirmed that it will only implement the ban on new leasehold flats after the updated commonhold framework has been brought into force.
• Cap and abolition of ground rents - Changes introduced in 2022 abolished ground rents in relation to new long leases of dwellings. The draft bill proposes that, in respect of leases granted before 2022, ground rents will be capped at £250 per annum for a transitional period of 40 years after the legislation’s implementation and thereafter reduced to a peppercorn. The government’s policy statement estimates that, currently, leaseholders pay over £600m pa in ground rents.
• Abolition of forfeiture - The draft bill abolishes forfeiture as a remedy for breach of covenant in both new and existing long residential leases. Forfeiture will be replaced with a fairer, more proportionate  “lease enforcement claims” procedure, which will place the court at the heart of decisions as to the most appropriate remedy. The new scheme would apply to existing long residential leases which currently include a forfeiture clause, and to all new long residential leases granted after the legislation comes into force.
• Less draconian remedies for the enforcement of rent charges – The draft bill seeks to further modify the regime for the enforcement of statutory rent charges. The effect of the proposed reforms will be that the original statutory remedies (such as the power for a rentcharge owner to enter into possession of a property and take income from it until arrears are paid) will be completely removed and all rentcharges will be subject to the new enforcement provisions introduced by the Leasehold and Freehold Reform Act 2024. 

The consultation closes on 24 April 2026. Following the response to the consultation and the completion of pre-legislative scrutiny of the draft bill, the next step will be to bring forward a substantive bill for Parliamentary approval.