Draft Commonhold and Leasehold Reform Bill published

On 27 January 2026, the government published a draft of the highly anticipated Commonhold and Leasehold Reform Bill (the Bill) alongside various supporting materials.

The government states that the Bill represents ‘one of the most significant overhauls of property law in decades’ and has the potential to affect ‘millions of homeowners, as well as developers, lenders and other parts of the housing market’.

It is a draft Bill and it has not yet been introduced into Parliament. The guide to the Bill notes that the Housing, Communities and Local Government Select Committee will ‘examine the measures in the draft Bill, consider issues raised by witnesses and stakeholders, and make recommendations to the UK government on the Bill’. The government sets out that by taking this approach it wants to prioritise transparency and collaboration. The Committee’s web page will contain details of how people can participate in this pre-legislative scrutiny. No specific timings are given as to when the final Bill will be introduced (although the government press release announcing the Bill suggests the ground rent cap could come into force in ‘late 2028’, suggesting there will not be a significant delay in the Bill being introduced).

What is in the Bill?

The draft Bill contains measures which will:

• Introduce a new framework for commonhold.

  In March 2025, the government published the Commonhold White Paper setting out its vision for a revised commonhold framework. The government notes the Bill presents legislation that will enact those proposals.

  Part 1 of the Bill sets out the new commonhold framework.

• Ban the sale of new long leasehold flats, which will by default mean new flats will need to be commonhold.

  The guide to the Bill summarises some of the key elements of this measure:

  • From the date this part of the Bill comes into effect, the marketing and grant of long leases of new flats will be prohibited (unless the lease qualifies for an exemption). Broadly, a long lease means a lease of more than 21 years.
  • Those selling an exempt leasehold flat will need to be explicit during the marketing, sale and registration process that they are selling a leasehold flat and provide clear evidence of why the lease is a permitted lease.
  • The Bill includes an enforcement regime, providing for a system of financial penalties for breach. The mis-selling of a leasehold flat will entitle the consumer to redress, allowing them in most cases to acquire the flat as a commonhold flat.
  • Existing leasehold flats will not be caught by the ban and the regrant of a lease for an existing leasehold flat, such as for a lease variation or extension, will also not be banned. The guide to the Bill states ‘If your flat was already leasehold before the ban starts, you are unaffected by the ban and can still sell or extend your lease as normal’.

  Alongside the draft Bill, the government has launched a consultation, ‘Moving to commonhold: banning leasehold for new flats’. This consultation runs until 24 April 2026. It is seeking views on the scope of the ban for leasehold flats, and potential exemptions. It is also seeking views on how the ban should interact with the commonhold proposals, when it could be introduced and transitional measures. Finally, it is asking organisations about the costs and benefits of moving to commonhold and complying with the ban.

  The guide notes that no decision has been made as to when the ban will come into effect, or transitional arrangements. In a recognition of the significance of this measure and the need for the market to adapt the government states the ban will only come into force when the reformed commonhold framework is ‘fully operational, and after a period the government considers sufficient for the market to adapt to using it.’

• Cap ground rents in older leases at £250 a year, changing to a peppercorn after 40 years.

  The Leasehold Reform (Ground Rent) Act 2022 limited ground rents in most new long leases of houses and flats in England and Wales to a peppercorn from 30 June 2022 (with retirement properties following on 1 April 2023). Since then, there has been continued political wrangling about what should happen to ground rents in existing leases. Indeed, it is this issue which is believed to have delayed the publication of the Bill (which was originally promised in the ‘second half’ of 2025). When the Bill was announced, the government press release, perhaps unsurprisingly, led with the above ground rent announcement.

  The Bill will amend the Leasehold Reform (Ground Rent) Act 2022 to bring the measures into effect. The cap will only apply to ground rents that fall due for payment after the new measures come into force. The guidance is clear, landlords ‘will not have to reimburse leaseholders for payments of ground rent already made before the cap comes into force, even if it exceeds the cap’. The guide also notes ‘there will be some limited exemptions (in particular for business leases, community housing leases and home finance plan leases)’.

  A policy statement has been published alongside the Bill entitled ‘Addressing unregulated and unaffordable ground rents’. This sets out the government’s position on this issue and ‘is designed to support scrutiny of the draft Bill’.

  There is some speculation that these measures may be challenged through the courts, with reportedly £15 billion of pension fund money being wiped out as a result of these changes.

• Abolish the right to forfeit a long residential lease for breach of covenant and introduce a statutory lease enforcement scheme.

  The Bill contains measures which will abolish the right to forfeit a long residential lease for breach of covenant. Instead, the Bill proposes a new statutory lease enforcement scheme.

  This guide to the Bill notes that the ‘new statutory lease enforcement scheme will apply to existing long residential leases where the landlord currently has the right to forfeit, and to all new long residential leases granted after the legislation comes into force. Landlords will be able to use the new scheme to enforce breaches that occur after the legislation comes into force’.

  We looked at similar proposals in relation to commonhold here. The government’s intention is to reduce the number of leaseholders losing their home through forfeiture, but we consider this may actually increase the number of forced sales where the leaseholder is effectively evicted, compared to the current leasehold forfeiture regime.

  Forfeiture will continue to apply to commercial leases.

• Regulate remedies for arrears of estate rentcharges.

  The Leasehold and Freehold Reform Act 2024 abolished what have been described as ‘draconian’ statutory enforcement provisions for historic rentcharges. However, the provisions did not extend to estate rentcharges (and certain other types of rentcharge). The government is now seeking to correct this, and through the Bill it is proposing to repeal sections 121 and 122 of the Law of Property Act 1925 which contain these ‘draconian’ measures. The Bill will also introduce a notice procedure for estate rentcharges.

  Rentcharge owners have other methods of enforcement available.

  Increased protections for homeowners on freehold estates are a key part of the government's agenda. On 18 December 2025, the government launched two consultations in this space:

  • Enhanced protections for homeowners on freehold estates. This consultation is open until 12 March 2026 and seeks views on proposals to implement aspects of Part 5 of the Leasehold and Freehold Reform Act 2024 which covers regulation of estate management. This consultation also covers the government’s plans to repeal sections 121 and 122 of the Law of Property Act 1925. The government notes it is its firm intention to repeal these sections for homeowners on privately managed housing estates, but the consultation is asking for views on whether repealing these sections would have any unintended consequences for the other types of rentcharge that exist and are still subject to these provisions.

  • Reducing the prevalence of private estate management arrangements. This is also open until 12 March 2026, and is seeking views on proposals to tackle unadopted amenities on privately managed housing estates in England.

  The Law Commission will also look at the management of housing estates. This project will consider the creation of a new right for freeholders on housing estates to take over the management of their estates. This would be a similar right to the existing leasehold 'Right to Manage'. The Law Commission plans to publish a consultation paper in 2026.

Comment

This will be particularly relevant for new developments which are being planned now that may be delivered in 2028 onwards. This will include mixed-use schemes. Currently, a single residential unit would bring a development into the scope of commonhold.

There are measures that seek to protect lenders, and we will focus on this in further updates.

Those dealing with longer term arrangements such as joint ventures and options which involve new developments that could be delivered after 2028 may not currently contemplate commonhold at all and should be reviewed.

There are some grandfathering provisions that are proposed in the consultation, i.e. existing leasehold structures, but this is likely to be subject to some limitations.