Commonhold and Leasehold Reform Bill: a flat owner’s guide

The draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, proposes to end leasehold ownership for newly built flats in England and Wales and replace it with commonhold. The Bill also proposes a £250 cap on ground rents (falling to a peppercorn after 40 years), the abolition of forfeiture for residential leases, and reform of estate rentcharge enforcement. None of the proposals are in force yet.

What is commonhold?

Commonhold is a form of property ownership designed for buildings with multiple separately owned units, such as blocks of flats. Each flat owner holds a freehold title to their unit. The structure, exterior and shared areas are owned and managed jointly by all the flat owners through a body called a commonhold association.

Commonhold has existed in English law since the Commonhold and Leasehold Reform Act 2002 but has been used for fewer than 20 developments comprising fewer than 200 units. The Commonhold White Paper published on 3 March 2025 sets out the reasons for that low uptake and the changes needed to remove the barriers. The Bill makes commonhold the default for newly built flats.

The key difference from leasehold is that there is no freeholder above the flat owners. There is no time limit on ownership, no ground rent, no service charge in the traditional landlord-and-tenant sense, and no risk of forfeiture. Costs of running the building are agreed and met by the flat owners through the commonhold association.

What the Bill proposes

End of leasehold for new flats

The Bill is expected to apply to purpose-built new developments, newly converted or redeveloped flats, purpose-built rental blocks being sold for homeownership, and other residential buildings where there are no existing registered long residential leases.

It is not expected to apply to newly completed developments built exclusively for rent, such as build-to-rent or social rent blocks, provided they are used for that purpose only.

Ground rent cap and the move to a peppercorn

For existing leases, the Bill proposes a cap on ground rents at £250 per year, with the rent falling to a peppercorn (effectively nil) after 40 years. The cap could come into force in late 2028, subject to parliamentary timings.

This sits alongside the Leasehold and Freehold Reform Act 2024 changes already in force, which made it cheaper to extend a lease (removing the requirement to pay “marriage value”) and easier to acquire the freehold collectively. Together, the two reforms substantially reduce the value of the freeholder’s reversionary interest in residential blocks.

Abolition of forfeiture for residential leases

The Bill proposes to abolish the threat of forfeiture for residential leases. Forfeiture allows a landlord to take back the property in full, regardless of how much equity the leaseholder has accumulated. It has long been criticised as a disproportionate remedy for what may be a minor or disputed breach.

The Bill would replace forfeiture with a more proportionate enforcement scheme. The details of that scheme will be set out in secondary legislation, but the headline change is the removal of the all-or-nothing risk for leaseholders.

Reform of estate rentcharge enforcement

Estate rentcharges are payments owed by some freeholders on private estates for the upkeep of shared areas. Under sections 121 and 122 of the Law of Property Act 1925, a rentcharge owner currently has very broad enforcement powers. The Bill proposes to repeal those sections and require rentcharge owners to give notice before commencing enforcement action for arrears.

What this means for existing leaseholders

None of the Bill’s proposals apply yet. Existing leaseholders continue to hold their leases on the existing terms, subject to the 2024 Act reforms that are already in force. The Bill does not propose to convert existing leases into commonhold automatically.

What may change for existing leaseholders, if the Bill is enacted as proposed, is the ground rent cap and the abolition of forfeiture. Both would apply to existing leases as well as new ones, though the precise mechanism and timing will be set out when the Bill is published in final form.

If you are considering a lease extension or collective enfranchisement now, the existing 2024 Act framework continues to apply. There is no need to wait for the Bill before acting. Specialist advice can help you decide whether extending now or waiting is the better course in your specific circumstances.

What this means for developers and freeholders

If the Bill is enacted on the current proposal, developers building new blocks of flats for sale will use commonhold rather than leasehold. The familiar model of a freeholder retaining a reversion and collecting ground rent will not apply to new schemes within scope.

For existing freeholders of leasehold blocks, the ground rent cap is the most immediate change. The value of a freehold reversion that depends largely on the ground rent stream will fall significantly. Existing reversionary interests are not expropriated, but their commercial value changes.

Managing agents will continue to play a role in commonhold buildings, but their relationship with flat owners changes: they will be retained by the commonhold association rather than by a freeholder, and accountable to the owners as a collective body.

Timetable and current status

The draft Bill is undergoing pre-legislative scrutiny and consultation between 27 January and 24 April 2026. The government has indicated it intends to introduce the final Bill in Parliament in autumn 2026, with delivery of the reforms committed within this Parliament. The ground rent cap is the only element with a publicly indicated commencement date, late 2028, subject to parliamentary timings.

The Leasehold and Freehold Reform Act 2024 remains the source of most of the changes already in force on lease extensions, the right to manage, collective enfranchisement and service charge transparency.

For background, read our overview of the wider reforms in the Renters’ Rights Act 2025, and our guidance on existing leaseholder rights at our leasehold disputes page.

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Speak to our property litigation team

Our leasehold dispute solicitors advise flat owners, residents’ associations and management companies on existing leasehold rights under the 2024 Act and the changes proposed by the Commonhold and Leasehold Reform Bill.

Call us on 020 7485 8811 or contact us online to speak to a member of the team.