Commonhold and Leasehold Reform Bill

Friday, February 27, 2026

On the 27th January 2026 the government published a Draft Commonhold and Leasehold Reform Bill. The Bill is part of the government’s policy of ending leasehold tenure and to modernise home ownership in England and Wales. Key parts of the Bill propose:

1. capping existing ground rents at £250;
2. banning leasehold as a form of tenure for new flats and replacing it with commonhold;
3. the abolition of forfeiture of residential property;
4. banning existing measures in respect of freehold properties; and
5. introducing a new regime in respect of the enforcement of owners’ responsibilities.

The introduction of new ground rents was abolished after the Leasehold Reform (Ground Rent) Act 2022 came into force. This meant that no ground rent requirements could be included in leases granted after the implementation of the Act. However, the Act did not affect existing leases which already had ground rent provisions in them. The new provision, if enacted, would cap existing ground rents at £250 per year and extinguish them entirely after a period of 40 years. 

The government has made no secret of its desire to end the leasehold system – which it describes as “feudal.” It describes the government’s alternative – commonhold - in the following way “the people who should own buildings, and who should exercise control over their management, shared facilities and related costs, are not third-party landlords, but the people who live within them and have a direct stake in their upkeep. Commonhold is specifically designed for managing shared blocks without a third-party landlord. It provides opportunity for democratic decision-making among owners, and the flexibility to meet the changing needs of residents and the building itself.”

The government proposes to replace forfeiture of residential leases with a new statutory lease enforcement regime. Forfeiture would be banned for all breaches of covenant (including arrears, breach of a user covenant, sub-letting or becoming insolvent). To bring a lease enforcement claim a landlord would need to satisfy each of seven conditions. An enforcement claim could not be commenced in respect of a failure to pay ground rent. The court would have broad powers to make orders it considered “appropriate and proportionate” in the circumstances. These could include a remedial order or an order for sale.

Status of the Bill

This is a draft Bill and is at the pre-legislative phase. This means that it has not yet been introduced to Parliament and there is scope for the Bill to be amended in light of feedback received following consultations (i) on moving to commonhold and (ii) on addressing unregulated and unaffordable ground rent.  In its policy paper the government indicated that it would be looking to introduce the reforms in 2028 and there should, therefore be ample scope for interested parties to express their view before that date.    

Conclusion

The Bill is likely to affect, significantly, landlords of residential and mixed use property. They are likely to wish to avail themselves to engage in the consultation process.