Commonhold and leasehold reform: what the draft Bill means for the market

On 27 January 2026, the government published the Draft Commonhold and Leasehold Reform Bill, setting out one of the most significant property law reforms in decades. The accompanying ministerial statement reaffirmed the government’s commitment to ending the leasehold system and modernising how homes are owned and managed in England and Wales. The policy papers confirm that the Bill aims to reinvigorate commonhold, support existing leaseholders and restrict the use of leasehold for most new flats.

Key measures in the draft Bill

• A ban on leasehold for most new flats once a viable commonhold system is in place.
• A wide set of commonhold reforms including new rules for mixed use, mandatory reserve funds and quicker debt recovery.
• A ground rent cap of £250 per year for many existing leases, which reduces to a peppercorn after 40 years.
• Abolition of forfeiture and the introduction of a more proportionate court-based enforcement regime.
• Repeal of harsh rentcharge powers on freehold estates.

Why this matters

These reforms are designed to make commonhold a workable model for residential, commercial and mixed-use developments. They follow expert recommendations from the Law Commission and form part of a broader policy shift that includes the Leasehold and Freehold Reform Act 2024 and the Renters’ Rights Act 2025.

The expected impact is far reaching. Developers will need to design schemes with commonhold structures in mind. Investors and lenders should prepare for new governance and cost allocation requirements. Leaseholders can expect stronger protections, clearer rights and improved long-term management standards.

Next steps for stakeholders

Although the Bill is still at the pre-legislative stage, the direction of travel is clear. Now is the right time to review exposure to leasehold across portfolios, assess future pipeline schemes and consider how commonhold governance may affect funding or operations. The government has also launched the consultation Moving to Commonhold, which asks for views on exemptions, timing and how a ban on new leasehold flats should be introduced.

In summary

This draft legislation represents a decisive move towards a modern system of home ownership based on long-term stability, transparency and resident control. It will influence how developments are structured, financed and governed for years to come.