In his first parliamentary appearance as Prime Minister, Andy Burnham announced the government’s intention to bring forward the Draft Commonhold and Leasehold Reform Bill. If passed, the Bill would lay the foundations for a significant shake-up of the residential property landscape for developers, managing agents, landlords, buyers, and sellers alike.
With the help of our property experts, we outline below what the Bill is set to bring about for the residential property sector, and what rushing the Bill could mean for homeowners, lenders, and the wider housing market.
The background: Putting the proposed leasehold reforms into context
The proposals are the latest in a long line of changes aimed at phasing out leasehold tenancies in recent years.
Let’s take a look at the key milestones on the road to implementation so far – and what we can expect to see next:
8 February 2022: The Leasehold Reform (Ground Rent) Act received Royal Assent – this reduced ground rents for most new leasehold properties to a peppercorn rent from 30 June 2022.
24 May 2024: The Leasehold and Freehold Reform Act 2024 received Royal Assent. The Act paves the way for a series of changes aimed at introducing protections, improving transparency, and strengthening existing rights for residential leaseholders – including making it easier to secure lease extensions, and increasing the statutory extension term to 990 years. Some provisions are in effect, but the legislation is being implemented in stages – meaning that a number of significant reforms are expected to be implemented from 2027 (subject to the secondary legislation required).
27 January 2026: The government published the Draft Commonhold and Leasehold Reform Bill. If passed, the Bill would replace much of the Commonhold and Leasehold Reform Act 2002, introducing a raft of reforms including abolishing leasehold tenancies for new developments, simplifying processes for existing leasehold tenancies to be converted to commonhold, implementing ground rent caps, and bringing the forfeiture process to an end.
1 September 2026: Prime Minister Andy Burnham announced the government’s intention to bring forward the Draft Commonhold and Leasehold Reform Bill.
What’s the difference between commonhold and leasehold?
Buying a leasehold property means that you purchase the right to occupy a property for a fixed period (usually 99,125 or 999 years). A freeholder or landlord owns the building and the land it sits on, and is typically responsible for the structure and communal areas. Ground rent and service charges may also be applicable.
Commonhold came about as an alternative way of owning flats and other buildings with shared communal areas such as hallways, lifts, gardens and the roof.
This means that those living in the apartments or houses will own their properties and the land they sit on, but the common parts such as the communal areas are owned by the commonhold association, of which the apartment or house owners are members, and the association is responsible for their management. Collectively, they have a direct say in how the structure and communal area are maintained, and will contribute towards maintenance and management costs. Unlike leasehold, ownership of the property does not expire
The breakdown: The Draft Commonhold and Leasehold Reform Bill at a glance
If passed, the Draft Bill could bring with it a host of changes that look set to permeate the residential property landscape in the coming years – including:
Leasehold restrictions for new flats: The Draft Bill proposes to prohibit the use of leasehold tenancies for most new flats, and to make commonhold the default form of tenure for most new flats.
Opening up avenues to convert to commonhold: The legislation also includes provision for mechanisms aimed at simplifying the conversion of existing buildings from leasehold to commonhold. This includes reducing the minimum threshold of consenting leaseholders (overcoming the need to achieve unanimous agreement to enable an application to proceed).
Expanding existing ground rent restrictions: Building on the restrictions introduced by the Leasehold Reform (Ground Rent) Act in 2022, the Bill propose to cap ground rents applicable to existing leasehold tenancies granted before 2022 at £250 per year, reducing to a peppercorn rent after 40 years of the Bill coming into effect.
Replacing forfeiture: Landlords would no longer have the ability to repossess properties where the terms of a lease have been breached. Instead, the Bill proposes transitioning to a judicial system aimed at bolstering protections for leaseholders, and ensuring a more balanced and proportionate approach to enforcement
The bottom line: What’s next?
We asked our experts what the implementation of the proposed leasehold reforms could look like in practice, the pieces of the puzzle they feel need to fall into place as the Bill progresses, and what the proposals could mean for businesses and individuals on both sides of the fence.
Here’s a snippet of what they had to say:
‘There is a lack of confidence in leasehold properties. Quite often, clients don’t fully understand what they’re taking on and, because there’s been so much negative publicity around leasehold in recent years, it’s caused a real problem – so change does need to come about quite quickly.
‘That said, we don’t want it rushed. If homeowners are expected to take on greater responsibility through commonhold, they need confidence that the information they’re receiving is accurate and reliable. Greater regulation of landlords and managing agents would help provide that confidence and consistency, and it was clear from the recent Labour conference this is being seriously considered now.
‘I also question how suitable commonhold will be for every type of development. It may work well for smaller blocks, but larger developments bring additional challenges around repairs, maintenance and decision-making.’
Emma Millington, Residential Property Partner.
‘I think the idea of modernising home ownership and making it fairer is the right decision. The problem is that trying to accelerate it now poses a large risk to an already unstable housing market, as well as to developers and mortgage companies.
‘Commonhold tenure has been around since 2004, but there are fewer than 20 registered commonhold developments in England. Mortgage companies, investors and developers have a much better understanding of the leasehold model that they have spent many years working with. Moving to a system in which commonhold becomes the default for most new flats therefore represents a significant change for the industry, and the practical and funding implications must be carefully considered.
‘Moving existing leasehold developments across to commonhold would involve significant administration and cost and, ultimately, somebody has to pay for that transition. In many cases, that cost is likely to fall on homeowners.
‘The key to moving to commonhold tenure will be ensuring that the transition does not create uncertainty or additional barriers to housing delivery. Developers and lenders need a clear workable framework, sensible transition arrangements, and certainty to be able to structure and fund new developments with confidence.’
Caryn Beidas, Real Estate Partner.
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Your questions, answered.
Q: What is the purpose of the proposed leasehold reforms?
A: The Draft Commonhold and Leasehold Reform Bill is aimed at enhancing protections for leaseholders by implementing measures to lower costs, reduce the risk of repossession, and rebalance the power dynamic with landlords.
Q: When could the leasehold changes take effect?
A: The proposed Commonhold and Leasehold Reform Bill is still in draft form, so it will undergo a series of parliamentary readings before heading for Royal Assent. The Bill is expected to be introduced to parliament in autumn 2026, with Royal Assent possible as early as 2027 (however, secondary legislation is needed to implement the proposed reforms).
Q: Who could the proposed leasehold reforms affect?
A: From developers, managing agents and landlords to existing and prospective leaseholders, the proposals present pertinent considerations on both sides of the property landscape.
Q: What types of properties could be affected, and how?
A: Under the proposals, commonhold would become the default form of tenure for most new flats, subject to the detailed scope and any applicable exceptions. The Draft Bill also proposes a £250 annual cap on ground rents under affected existing residential leases, reducing to a peppercorn rent after 40 years.
Q: What should businesses and individuals be thinking about in light of the proposals?
A: Wherever you sit in the property landscape, it will be vital to remain abreast of the Bill’s progress as it moves through parliament. Whether you’re looking for support to keep track of the changes or want to explore steps you could be taking to prepare, there’s plenty our property experts can do to help. Get in touch to find out more.