The government published the draft Commonhold and Leasehold Reform Bill on 27 January 2026. The Bill makes commonhold the default tenure for new flats, bans new leasehold flats in England and Wales, caps existing ground rents and abolishes forfeiture for long residential leases.
Commonhold combines freehold ownership of a single property in a larger development with membership of a limited company that will own and manage the common parts of the development. It is intended that commonhold becomes the standard form of ownership for residential flats and mixed-use properties. New leasehold properties in such developments will be banned and replaced by commonhold as the default tenure.
Commonhold ownership in England and Wales was created by Part 1 of the Commonhold and Leasehold Reform Act 2002, but take-up of the scheme to date has been very limited. The proposed new legislation replaces the old Act with a more detailed approach to how commonhold will be created, operated, and ended.
Commonhold and Leasehold Reform Bill Summarised
In brief, the Bill is concerned with: –
- Replacing Part 1 of the existing Commonhold and Leasehold Reform Act by setting out new provisions for the set-up of a commonhold development, its handover to the commonhold association and ongoing management.
- Prohibiting the marketing and sale of new leasehold flats, subject to limited exemptions for “permitted leases”. (See below on new consultation released on 27 January 2026).
- Capping ground rents in most existing leases at £250 a year, reducing to a peppercorn after 40 years from the commencement of the new legislation.
- Abolishing the right to forfeit a long residential lease for breach of covenant and introducing a new statutory lease enforcement scheme where a court decides the outcome of the breach.
- Removing the statutory remedies to enforce an estate rentcharge and requiring rentcharge owners to provide notice before enforcement action can commence.
The Housing, Communities and Local Government Select Committee will report on the draft Bill. It will communicate responses to the government’s consultation on banning new leasehold flats, and then the government will bring forward a substantive Bill.
Consultation on the Ban of New Leasehold Flats
The government has also released a consultation on the banning new leasehold flats in England and Wales which opened on 27 January 2026 and closes on 24 April 2026.
The consultation seeks views on: –
- Ensuring that most new residential flats will be sold as commonhold instead of leasehold. The proposed ban would apply to purpose-built new developments, houses newly converted into flats where at least one flat is for sale on a long lease, commercial buildings newly redeveloped to contain flats where at least one flat is for sale, purpose-built rental blocks whose owners have opted to sell flats for home ownership, and other residential buildings without existing registered long residential leases.
- The scope of any exemptions to the ban, both within commonhold developments and in other types of building.
- Whether the ban should take a similar approach to the Leasehold and Freehold Reform Act 2024, which prohibits the use of leasehold houses subject to exceptions.
Conclusion
The Bill is a significant milestone and marks a major change for the leasehold ownership system as we know it. It is a significant overhaul of land ownership in England and Wales and will reshape how property schemes are designed and managed.
The current intention is for the reforms to be introduced before the end of the Parliamentary term in 2029. Please get in touch if you have any questions on how the changes will impact you.
