Posted Wednesday 9th September 2026
The Government’s proposed Commonhold and Leasehold Reform Bill represents one of the most significant reforms to residential property ownership in recent years. If implemented, it will fundamentally change how new flats are owned and managed, whilst introducing additional protections for leaseholders and potentially reshaping parts of the residential property market.
There are estimated to be around 5 million leasehold dwellings in England, with over a third of homes in London held on a leasehold basis[1]. The proposed reforms could result in significant changes to how residential property is owned, managed and transacted.
The Bill proposes to ban the use of leasehold for new flats and instead make commonhold the default form of tenure. Commonhold ownership would enable individuals to own the freehold in their flats as individual ‘unit holders’. Unit holders would also have a direct role in the management and decision-making of their buildings through a commonhold association.
The Bill also proposes to introduce a revised lease enforcement scheme. At present, forfeiture clauses can allow landlords to terminate a lease following certain breaches, including non-payment of ground rent or service charges.
Conversely, a new enforcement scheme will mean that certain statutory conditions must be satisfied before a court application is made. Courts will then have greater powers to grant fairer and more proportionate remedies in response.
Finally, ground rents are proposed to be capped at £250 a year, falling to a peppercorn after 40 years for most long residential leases not already covered by existing legislation. Importantly, unlike the proposed ban on new leasehold flats, the ground rent cap is intended to apply to many existing residential leases, meaning leaseholders already paying ground rent could benefit from the reforms. At present, there are approximately 3.8 million properties with ground rent obligations across England and Wales, with an estimated £600 million paid in ground rents last year.[2]
Whilst the ban on leasehold flats would not apply retrospectively to existing leasehold properties, commonhold ownership is intended to give owners greater control over the management of their buildings, enabling them to play a more active role in decision-making and financial oversight.
Developers of residential and mixed-use schemes should consider how future projects may need to be structured if commonhold becomes the default tenure, particularly in relation to management arrangements and shared infrastructure.
The proposed abolition of forfeiture is another significant reform under the Bill. Leaseholders should still be sure to strictly comply with the terms of their lease, however, this reform would significantly alter the balance between landlord enforcement rights and leaseholder protections, with courts being given greater discretion to impose remedies that are proportionate to the nature of the breach.
Lastly, the capping of ground rent means that leaseholders should have greater financial certainty during the term of their occupation. It may also reduce instances where lenders are unwilling to offer mortgages on properties with leases containing excessive ground rent provisions, thereby potentially improving the marketability of affected leasehold properties.
The proposed cap may also have implications for investors and freeholders whose assets derive value from ground rent income, making this a reform that is likely to be closely monitored across the property sector.
Whilst the Bill remains in draft form, stakeholders should continue to monitor its progress and consider how the proposed reforms may affect them.
The proposed reforms seek to give homeowners greater control, security and financial certainty through commonhold ownership, the abolition of forfeiture and restrictions on ground rents.
Whilst the detail and implementation of the reforms remain subject to further legislative scrutiny, the proposals have the potential to reshape the residential property market for developers, investors, lenders and homeowners alike. Businesses operating in the sector should monitor the Bill closely as it progresses through Parliament.
This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.
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