Proposed Leasehold and Commonhold reform - the end of new leasehold flats?

Katie Pinnell, partner in our residential team, explores the future of leasehold and commonhold reform following the Government’s Draft Commonhold and Leasehold Reform Bill, published on 27 January 2026.

If implemented in its current form, the Bill would represent a significant shift in the ownership structure of flats in England and Wales.

The headline point for purchasers is clear: the government intends to make commonhold, rather than leasehold, the default model for new flats. That does not mean leasehold flats disappear overnight, but it does mean we should all prepare for a market in which commonhold becomes increasingly central.

What has the government announced?

The government states that the draft Bill is intended to modernise, strengthen and reinvigorate the commonhold and leasehold framework. In practical terms, the proposals include:

• Banning leasehold for most new flats, with commonhold intended to become the preferred ownership structure.
• Making it easier for existing leaseholders to convert to commonhold, where the relevant statutory requirements are met.
• Capping existing ground rents at £250 per year, with those rents reducing to a peppercorn after 40 years.
• Abolishing forfeiture for residential leases and replacing it with a new statutory lease enforcement regime.
• Reforming estate rentcharge enforcement by removing harsh remedies currently available in relation to estate rent charges on freehold estates.

Does this mean the end of new leasehold flats?

In policy terms, yes – for most new flats. The government’s stated objective is to ban leasehold for most newly created flats and to use commonhold instead.

In legal terms, not yet. The Bill is currently in draft form. It must pass through the legislative process before it becomes law. The precise scope, commencement date, transitional arrangements and any exemptions will be critical.

For purchasers, the important distinction is this:

• Existing leasehold flats remain valid unless and until specific statutory changes affect them.
• New leasehold flats are likely to become restricted once the relevant provisions are enacted and brought into force.
• Commonhold is expected to become more prominent, particularly for new-build flats and potentially for converted leasehold blocks.

What is commonhold, and why does it matter?

Commonhold allows a flat owner to own the freehold of their individual unit, while the shared parts of the building are owned and managed through a commonhold association. The model is designed to remove the traditional landlord and tenant structure from flat ownership.

For buyers, that could mean:

• No wasting lease term — there is no lease running down over time.
• No ground rent — ownership is not subject to a separate ground rent payable to a landlord.
• Greater control over building management — unit owners participate through the commonhold association.
• Different responsibilities — owners will need to engage with management, budgeting, reserve funds, repairs and decision-making.

Commonhold should not be viewed as “freehold without obligations”. It is a collective ownership and management structure. Purchasers will still need to scrutinise service charge equivalents, building management arrangements, the commonhold community statement, reserve fund obligations and dispute mechanisms.

What does this mean if you are buying now?

Purchasers should not assume that current leasehold transactions are defective or that the market will immediately move to commonhold. However, the proposed reforms do make the legal and commercial due diligence more important.

If buying an existing leasehold flat, key points to check include:

• Lease length – a shorter lease may still affect value, mortgageability and future saleability.
• Ground rent – review the amount, review pattern and lender acceptability. The proposed £250 cap is not yet law.
• Service charge history – check current charges, planned major works, reserve funds and disputes.
• Management structure – identify whether the landlord, management company, right to manage company or residents’ company controls the building.
• Building safety and insurance – particularly for higher-risk buildings or blocks affected by remediation issues.
• Potential future conversion – consider whether commonhold conversion may become realistic, but do not value the property on the assumption that conversion will happen.

If buying a new-build flat

Purchasers should ask more detailed questions at reservation stage, including:

• Will the flat be sold leasehold or commonhold?
• If leasehold, why is leasehold being used and will any transitional rules apply?
• What ground rent is payable, if any?
• How will the building be managed after completion?
• What budget has been prepared for shared costs, reserve funds and major expenditure?
• Is the developer, managing agent and lender prepared for any commonhold structure?

Developers may need time to adjust sales documentation, estate structures, funding arrangements and management models. Buyers should expect greater focus on how new apartment schemes are structured.

Ground rents

The plan to cap ground rents at £250 per year (decreasing to a peppercorn after 40 years) represents a material intervention in existing leasehold arrangements. However, purchasers should treat the proposal with care until legislation is finalised. The current lease terms remain relevant for valuation, lender approval and conveyancing enquiries.

Example: a buyer considering a flat with a ground rent that doubles periodically should still investigate the current lease provisions in full. The proposed reforms may improve the position in future, but they should not be treated as already in force.

Forfeiture and why abolition matters

Forfeiture has long been one of the most severe landlord remedies in leasehold law. The draft Bill proposes to abolish the threat of forfeiture for residential leases and replace it with a new enforcement scheme intended to be fairer and more proportionate.

For purchasers and existing leaseholders, this is significant because forfeiture can operate as a disproportionate remedy where arrears or breaches are relatively modest compared with the value of the property.

The replacement regime will need careful review once final provisions are known.

Estate rentcharges: relevance for freehold buyers

The reforms are not limited to flats. The government also intends to address harsh enforcement powers linked to estate rent charges on freehold estates.

This matters for buyers of new-build freehold houses on managed estates. Many such properties are subject to estate rentcharges to fund shared roads, landscaping, lighting, drainage or open space maintenance.

The proposed repeal of certain enforcement powers would be a welcome development, but buyers should still review:

• the amount payable;
• the mechanism for increasing charges;
• the management company structure;
• rights to challenge charges;
• lender requirements; and
• the remedies available for non-payment.

What happens next?

The Housing, Communities and Local Government Select Committee launched pre-legislative scrutiny of the draft Bill on 4 February 2026. That process may lead to further refinement before legislation is introduced formally and taken through Parliament.

The publication of the draft Bill marks a decisive step towards commonhold becoming the principal ownership model for new flats in England and Wales. For residential property purchasers, the message is not that leasehold has ended immediately, but that the market is moving.

Buyers should continue to assess existing leasehold flats on their current legal and commercial terms, while also recognising that commonhold is likely to become increasingly relevant in new-build transactions.

For now, the safest approach is practical: understand exactly what you are buying, test the management and cost arrangements, and do not assume proposed reform has already corrected current title risks. If you would like further support, please get in touch with Harrison Drury’s residential team on 01772 258 321.

Reference: The government’s materials are published at GOV.UK under “Draft Commonhold and Leasehold Reform Bill”