Draft Commonhold and Leasehold Reform Bill Explained (2026 Guide): What Leaseholders Need to Know

The Draft Commonhold and Leasehold Reform Bill is one of the most significant proposed changes to residential property ownership in England and Wales for decades. If implemented, it could fundamentally change how new flats are sold, how existing leasehold buildings are managed and how much control homeowners have over the properties they live in.

For years, leaseholders have raised concerns about escalating service charges, ground rents, limited control over building management and the complexities of extending leases or purchasing the freehold. The Government’s proposed reforms aim to address many of these long-standing issues by encouraging commonhold ownership, strengthening leaseholder protections and modernising outdated legislation.

However, it is important to understand that the legislation is still in draft form. While the proposals provide a clear indication of the Government’s direction, Parliament has not yet passed the final legislation. As a result, leaseholders, freeholders, Resident Management Companies (RMCs), Right to Manage (RTM) companies and property managing agents should remain informed while continuing to comply with the current legal framework.

This guide explains the proposed reforms, how they may affect existing leaseholders and what they could mean for the future of residential block management.

Key Takeaways

Proposal	What It Means
Commonhold becomes the preferred ownership model	Most newly built flats would be sold as commonhold instead of leasehold.
Easier conversion to commonhold	Existing leaseholders may find it easier to convert their buildings.
Ground rent reforms	Ground rents under many existing leases could be capped before eventually reducing to a peppercorn.
Leasehold forfeiture	The existing forfeiture process could be replaced with a fairer enforcement system.
More homeowner control	Owners would have greater influence over how their buildings are managed.
Bill status	The legislation is still being scrutinised and is not yet law.

Why Is the Government Reforming Leasehold?

Leasehold ownership has existed in England and Wales for centuries, but in recent years it has faced increasing criticism from homeowners, campaign groups and industry professionals.bMany leaseholders have experienced issues including:

• Rising service charges
• High ground rents
• Limited transparency
• Poor communication from managing agents
• Difficulty purchasing the freehold
• Expensive lease extensions
• Limited control over building management

Although reforms introduced in recent years have improved certain aspects of leasehold ownership, the Government believes that a more fundamental change is required.

The proposed reforms aim to make property ownership simpler, fairer and more transparent by replacing many traditional leasehold arrangements with commonhold ownership wherever possible.

What Is Commonhold?

One of the central proposals within the Draft Commonhold and Leasehold Reform Bill is to establish commonhold as the preferred ownership model for residential flats.

Unlike leasehold ownership, where a lease gradually reduces in length and a freeholder retains ultimate ownership of the building, commonhold allows homeowners to own their property pprofessionals. freehold. Every apartment becomes an individual freehold unit, while the communal areas are owned and managed collectively through a Commonhold Association.

This approach removes the traditional landlord and allows homeowners to have greater influence over how their building is maintained and managed.

Responsibilities of a Commonhold Association

The association would normally be responsible for:

Responsibility	Purpose
Building maintenance	Maintaining communal areas and structural elements
Building insurance	Arranging comprehensive insurance cover
Financial management	Preparing budgets and collecting contributions
Reserve funds	Planning for future major works
Contractor management	Appointing and overseeing contractors
Managing agents	Employing professional block management companies where required
Governance	Organising meetings and making collective decisions

Although ownership structures would change, apartment buildings would still require professional financial management, maintenance planning and compliance monitoring.

Will Leasehold Flats Be Banned?

A major proposal within the draft legislation is that most newly built flats would no longer be sold as leasehold properties. Instead, developers would generally be expected to sell new apartments using the commonhold model.

The Government believes this will create a fairer system by removing the traditional landlord and giving homeowners permanent ownership from the day they purchase their property. However, this proposal primarily affects future developments.

Millions of existing leaseholders should not assume that their properties will automatically become commonhold. Existing leasehold buildings are expected to continue operating under current legal arrangements unless owners choose to pursue conversion under any future legislation.

Can Existing Leasehold Buildings Convert to Commonhold?

Perhaps one of the most significant proposals for existing homeowners is the introduction of a more practical route for converting leasehold buildings into commonhold developments.

Under current legislation, conversion generally requires unanimous agreement from everyone with a legal interest in the building. This includes leaseholders, freeholders and, in many cases, mortgage lenders. Achieving unanimous consent is often extremely difficult, meaning relatively few buildings have successfully converted.

The Government is proposing a more accessible process that could reduce the leaseholder consent threshold, making conversion a realistic option for many residential developments. Before pursuing conversion, homeowners and directors would still need to consider several important factors.

Matters to Review Before Conversion

• The condition of the building
• Outstanding service charge arrears
• Existing reserve funds
• Planned major works
• Commercial units within the development
• Existing management contracts
• Mortgage lender requirements
• Voting arrangements
• Financial responsibilities
• Long-term management arrangements

While the proposed reforms could make conversion easier, every building will still require detailed legal, financial and property management advice before proceeding.

Thinking about the future of your residential development? Your Home Property Management supports leaseholders, RTM companies and Resident Management Companies with professional block management, financial administration and long-term maintenance planning across London, Kent and Essex.

What Could Happen to Ground Rents?

Ground rents have been one of the most controversial aspects of leasehold ownership over the past decade.

The Draft Commonhold and Leasehold Reform Bill proposes significant changes that could benefit many existing leaseholders. Under the current proposals, ground rents on many existing residential leases could be capped at £250 per year before eventually reducing to a peppercorn following a transitional period. Certain lease types may remain exempt, and the proposals are still subject to Parliamentary approval.

For many homeowners, these changes could make long-term property ownership more affordable while reducing one of the most criticised features of the leasehold system.

Will Leasehold Forfeiture Be Abolished?

One of the most significant protections proposed in the Draft Commonhold and Leasehold Reform Bill relates to the abolition of leasehold forfeiture.

Under the current leasehold system, forfeiture allows a landlord to seek the termination of a residential lease if a leaseholder breaches the terms of their lease. In extreme cases, this can result in a homeowner losing a valuable property because of unpaid service charges or another breach of the lease.

It is important to note that these proposals do not remove a leaseholder’s legal obligations. Service charges, administration charges and other lawful payments would still need to be paid in full. The proposed reforms simply change how those obligations may be enforced if disputes arise.

Greater Protection for Freehold Homeowners on Private Estates

The proposed reforms extend beyond leaseholders. Many freehold homeowners living on private estates pay estate management charges for maintaining shared facilities such as roads, gardens, drainage systems, lighting and open spaces.

The Draft Commonhold and Leasehold Reform Bill proposes stronger legal protections by limiting some of the existing enforcement powers available to estate rentcharge owners. It would also require proper notice before enforcement action can begin, giving homeowners greater transparency and protection.

A New Right to Request Building Improvements

Another proposed change would allow leaseholders to request certain improvements to their buildings more easily. One example highlighted by the Government is the installation of gigabit-capable broadband, helping residents access modern digital infrastructure without unnecessary delays or refusals.

The detailed process has not yet been finalised, and the legislation will need to clarify:

• Which improvements qualify
• When landlords may refuse requests
• The approval process
• Responsibilities for installation and maintenance

If introduced, these changes could make residential buildings more adaptable to future technologies while giving homeowners greater influence over improvements to their developments.

How Will Commonhold Buildings Be Managed?

One common misconception is that commonhold eliminates the need for professional property management. In reality, commonhold developments will continue to require experienced management to ensure buildings remain safe, compliant and financially sustainable. Professional managing agents are still expected to oversee many essential responsibilities.

Management Function	Why It Matters
Financial budgeting	Ensures contributions cover ongoing costs
Annual accounts	Maintains financial transparency
Building insurance	Protects owners against major risks
Fire and safety compliance	Meets legal obligations
Planned maintenance	Prevents costly reactive repairs
Major works planning	Protects long-term building condition
Contractor management	Maintains service quality
Reserve fund planning	Prepares for future expenditure
Company administration	Supports governance and decision-making

The key difference is that the managing agent would normally be appointed by, and accountable to, the Commonhold Association rather than an external freeholder. This gives homeowners greater influence over how their building is managed while maintaining professional oversight.

Whether your building is leasehold today or transitions to commonhold in the future, Your Home Property Management provides proactive block management, financial administration and maintenance planning tailored to residential developments across London, Kent and Essex.

Will Property Managing Agents Be Regulated?

While the Draft Commonhold and Leasehold Reform Bill will bring in a number of big changes, it does not currently cover a comprehensive regulatory regime for property managing agents. This has raised concerns by industry groups and Parliamentary committees, many of which think that a better regulation of the sector would lead to better standards across the industry.

Recommendations have included:

• Mandatory professional qualifications
• Independent regulation
• Stronger consumer protection
• Greater accountability
• Enhanced enforcement powers

It is not clear whether these proposals will be included in final legislation, but they will likely be an important issue in the parliamentary process.

What Does the Draft Bill Mean for RMCs and RTM Companies?

Resident Management Companies (RMCs) and Right to Manage (RTM) companies will be important for the foreseeable future of existing leasehold buildings. Many of the developments already have considerable control at this point through these management structures, such as appointing managing agents, approving budgets and maintenance.

The conversion to commonhold, however, would be a much more basic change. Eventually, the Directors must think about:

• Governance structures
• Transfer of assets
• Existing contracts
• Reserve funds
• Company administration
• Legal documentation
• Financial responsibilities

Any conversion into the future must only take place after specialist legal, financial and property management advice.

What Questions Still Remain?

The Draft Commonhold and Leasehold Reform Bill is a positive step towards reform, but there are many questions yet to be answered.

These include:

• Will there be an affordable conversion?
• Where will mixed use developments be managed?
• How will the existing reserve funds be affected?
• What will the mortgage lenders do?
• Is there a need to regulate managing agents?
• What will be done with shared ownership properties?
• When will the reforms be in effect?

A number of these factors will have to be addressed before law can successfully change the way residential property is owned.

When Could the Changes Become Law?

The proposals are not in force yet. The draft Commonhold and Leasehold Reform Bill has passed into the pre-legislative stages but will need to get through both Houses of Parliament to become law, including a period of debate. Some provisions may need further regulations and/or different commencement dates until they apply, even after they have been enacted as Royal Assent.

Therefore, leaseholders, freeholders, RMC directors and RTM companies should adhere to existing legal duties until the final legislation comes into effect.

Conclusion

The Draft Commonhold and Leasehold Reform Bill is one of the most ambitious bills to attempt to modernise residential property ownership in England and Wales.

Provided it is passed, it will revolutionise the ownership, management and financing of flats by encouraging commonhold, enhancing the rights of leaseholders and enhancing the enforcement system. The proposals have yet to be examined by Parliament, however, and there are still some key issues that might be amended before the law comes into effect.

Looking for advice or guidance on block management or Right to Manage/freehold ownership? Call Your Home Property Management to speak about how our knowledgeable team can provide residential developments within London, Kent and Essex with clear, pro-active and completely compliant property management solutions.

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