The Leasehold and Commonhold Reform Bill – Unpacking the proposals

On 27 January 2026, the Government published its draft Leasehold and Commonhold Reform Bill (the “Bill”). Luke Holden and Ellena Pritchard in our land & property dispute resolution team, look at the changes that could have an impact on residential property law in the future.

What is the current system?

Whilst the Leasehold and Freehold Reform Act 2024 (the “2024 Act”) received Royal Assent on 24 May 2024, many of its provisions are yet to take effect.

Therefore, much of the leasehold property system is currently governed by a string of statutes and reforms, including the Leasehold Reform Act 1967, the Commonhold and Leasehold Reform Act 2002 and the Leasehold Reform (Ground Rent) Act 2022.

Further to the changes set out in the 2024 Act, the Government have since published the draft Bill setting out further proposals for changes to the leasehold system.

What are the proposed changes?

The draft Bill proposes a complete overhaul of the leasehold property system, the most notable proposals being:

The ground rent cap

Ground rent is a sum paid by leaseholders for the land that their property sits on.  Whilst the implementation of the Leasehold Reform (Ground Rent) Act 2022 scrapped the collection of ground rent for most new, residential leasehold properties, existing leaseholders remained under a requirement to meet this additional fee.

Under the proposed reforms, yearly ground rent for existing leasehold properties will be capped at £250 a year with the goal of reducing this amount down to a nominal, “peppercorn” rent after a period of 40 years.

The change will level the playing field between old and new leases, although will not apply to business leases, community housing leases, or retrospectively.

An end to leasehold arrangements 

The draft Bill also imposes a statutory restriction on the creation of new leasehold flats, in favour of commonhold ownership.  Local authorities will be afforded enforcement powers, such as financial penalties, for those that breach the ban.

Upon the purchase of a commonhold property, a purchaser will become a “unit owner”.  Unit owners are represented by their commonhold association and will be afforded the opportunity to become a part of this association, contributing to decisions regarding their unit.

Existing leasehold flats are not intended to be caught by the proposed ban and further exemptions will apply to social housing and student accommodation.

Whilst commonhold arrangements allow for a democratic, transparent approach to property management, there is currently estimated to be fewer than 20 commonhold developments in the UK.

Therefore, the change will be a significant one which the Government is currently consulting on through their “Moving to Commonhold” consultation, which is set to conclude on 24 April 2026.

Abolition of forfeiture

The intention to abolish a landlord’s right to forfeit residential long leases appears to be motivated by the purported power imbalance between landlords and tenants, with landlords able to repossess homes for minor breaches of a lease.

The draft Bill proposes the introduction of a statutory lease enforcement scheme which will allow landlords to deal with breaches of a lease with the courts tasked in deciding on the most appropriate and proportionate order to address a leaseholder’s breach.

Whilst reliance on forfeiture in instances of minor breaches is somewhat disproportionate, the current system is regulated by strict procedural safeguards with an estimated 0.002 percent of residential leases facing forfeiture each year.

Therefore, the proposal appears to be more of a comfort blanket for leaseholders rather than a substantive change to their legal rights.

Impact of the proposed changes

For leaseholders, the Bill represents a welcomed step in the right direction for individuals seeking control over their own homes.

The introduction of a ground rent cap would prevent ever increasing rent obligations, making the sale and re-mortgage of leasehold properties more feasible.

Conversely, the move to commonhold arrangements and the abolition of forfeiture is a clear move to rebalance the landlord/leaseholder relationship in favour of homeowners.

Almost expectedly, the draft Bill has been met with hostility from freeholders who contend that the Bill interferes with existing property rights, particularly the effect that the proposed cap to ground rent will have on their income.

However, the effects of the proposed reforms stem beyond the freeholder as any loss of income has the potential to interfere with investors and markets more widely.

However, with the Bill being in draft form we can expect significant pre-legislative scrutiny before anything substantive is put to Parliament.

According to current estimates, it is not anticipated that a ground rent cap will be introduced until late 2028.

If you would like to speak with one of our experts, then please get in touch with our land & property dispute resolution team on 01772 258321.