Draft Commonhold and Leasehold Reform Bill a “significant milestone” for leaseholders

The government has today published a draft Commonhold and Leasehold Reform Bill, setting out proposed changes to the leasehold system in England and Wales. The Bill will now be subject to pre-legislative scrutiny by Parliament.

The draft legislation includes proposals to cap ground rent for most existing residential leaseholders at £250 per year. Under the proposals, ground rent would then reduce to a peppercorn (effectively zero) after 40 years. The cap would apply to many leases granted before the Leasehold Reform (Ground Rent) Act 2022, which already ended ground rents for most new long residential leases.

The Bill also proposes banning the sale of most new flats as leasehold in future, with commonhold becoming the default tenure instead. Commonhold allows flat owners to own their homes outright and jointly manage their building with other owners, rather than having a landlord.

For existing leaseholders, the draft Bill includes measures to make it easier to convert a building from leasehold to commonhold, where leaseholders choose to do so.

It also proposes abolishing forfeiture for long residential leases, replacing it with a new court-based enforcement process. This would end the current position where a leaseholder can, in some circumstances, lose their home over relatively small debts.

The government has indicated that, subject to parliamentary approval, the ground rent cap could come into force in late 2028.

“This is a significant milestone for leaseholders and marks the beginning of the end for the leasehold system as we know it. The draft Bill tackles some of the most damaging features of leasehold, including high and escalating ground rents and the threat of forfeiture, which has left some leaseholders at risk of losing their homes over relatively small debts.

“More fundamentally, the Bill signals a decisive shift away from leasehold as the default form of home ownership. Moving towards commonhold, and making it easier for existing buildings to convert where leaseholders choose to do so, has the potential to give homeowners genuine control, security and long-term certainty over their homes. This draft legislation represents a significant step towards a fairer and more transparent system of home ownership.”

The government has launched a consultation, setting out its proposed approach to introducing a ban on the use of leasehold for new flats so that the reformed commonhold model can be the default tenure for new flats.

The consultation questions relate to scope, exemptions, timings, transitional arrangements, and the wider commonhold legal framework.

The consultation will run until 24 April 2026, and views can be sent online or via email to [email protected].