🏠 Five Things to Know About the Commonhold and Leasehold Reform Bill

On Tuesday 27th January, the government finally published its draft Commonhold and Leasehold Reform Bill, alongside a consultation seeking views from both industry professionals and the public.

The Bill will now begin its journey through scrutiny by the Housing, Communities and Local Government Committee and will remain subject to consultation. As a result, it’s likely to be some time before any of its proposals become law.

That said, the Bill signals a clear direction of travel. Here are five key things to know, and what they could mean for anyone buying a home.

1️⃣ Ground rents on existing leases would be capped

The most headline-grabbing proposal is a cap on ground rents for existing residential leaseholds at £250 per year. After 40 years, that cap would reduce to a peppercorn rent (effectively zero).

This change could significantly reduce costs for leaseholders currently facing escalating ground rent charges.

💡 Why it matters for buyers and lenders:

High ground rents can deter lenders and complicate mortgage approvals. Capping them should improve marketability and reduce friction when securing a mortgage.

2️⃣ Most new leasehold flats would be banned

The Bill proposes stopping the creation of most new leasehold flats once a reformed commonhold model is in place. Instead, commonhold would become the default form of ownership for flats.

Under commonhold, owners collectively own the building and land, rather than leasing it from a freeholder.

🏢 What this could mean for buyers:

Commonhold flats may be easier to sell and mortgage, with fewer administrative hurdles and less reliance on external freeholders.

3️⃣ Converting existing leasehold buildings would become easier

Reform isn’t limited to new homes. The Bill also outlines clearer, more accessible pathways for existing leaseholders to convert their buildings to commonhold.

This could include lower consent thresholds, removing the need for unanimous agreement in some cases.

🔑 For homeowners:

This could offer greater control over building management, service charges, and long-term security.

4️⃣ Forfeiture would be abolished and enforcement reformed

Under current rules, leaseholders can lose their home through forfeiture for relatively minor breaches, such as unpaid ground rent or service charges.

The draft Bill would abolish forfeiture for long residential leases and replace it with a fairer, court-based enforcement system.

🛡️ What this means for borrowers:

Reducing this risk could increase confidence for both buyers and lenders when dealing with leasehold properties.

5️⃣ Commonhold would receive a modern legal framework

Although commonhold has existed in law since 2002, it’s rarely used due to legal and structural barriers.

The Bill proposes a comprehensive new legal framework designed to make commonhold more workable for developers, lenders, and owners alike.

🏗️ What this means for housing policy:

If commonhold becomes practical at scale, it could fundamentally change how flats are owned in England and Wales, reducing reliance on traditional leasehold arrangements.