King's Speech 2026: Commonhold and Leasehold Reform Bill

Commonhold and Leasehold Reform Bill

“My Ministers will bring forward legislation to… reform the leasehold system,
including the capping of ground rents”

● For far too many leaseholders, the reality of home ownership has fallen
woefully short of the dream – their lives marked by a recurring struggle with
unregulated and unaffordable ground rents; unjustified permissions and
administration fees; unreasonable or extortionate charges; and onerous
conditions imposed with little or no consultation. This is not what home
ownership should entail.

● The Bill will modernise property law, deliver a fair and efficient modern
housing market and transform the experience of home ownership for millions
of leaseholders across the country. Alongside the ongoing implementation of
those reforms to the leasehold system already in statute, the Bill progresses
key reforms necessary to honour the manifesto commitment to finally bring
the feudal leasehold system to an end in this Parliament.

What does the Bill do?

● The Bill marks the beginning of the end for the feudal leasehold system that
has tainted the dream of home ownership for so many. It will transform the
experience of home ownership for millions of leaseholders across the country
and support them with the cost of living by giving them greater control over
how their homes are managed and the bills they pay.
● The current leasehold system in England and Wales has a number of
fundamental, structural flaws that mean it is weighted against the interests of
leasehold homeowners:

○ Third-party landlords exercise control over the management, shared
facilities and related costs of buildings rather than the leaseholders
who live in them and who have a direct stake in their upkeep.

○ Leaseholders do not own their homes forever and their value tends to
fall over time as the years remaining on leases reduce.

○ Leaseholders and residents on freehold estates can be viewed by
freeholders and managing agents not as homeowners or customers,
but as a source of steady profit, whether that be through unregulated
and unaffordable ground rents, unjustified fees, or rentcharges.

45
 ○ Leaseholders and residents on freehold estates are vulnerable to
disproportionate enforcement mechanisms such as forfeiture.

● The Bill will:

○ Create a new legal framework for commonhold, providing full
freehold ownership for flats and a bespoke approach to communal
living without control by third-party landlords; ensuring this radical
improvement on leasehold will be available for as many as possible by
making it workable for more types of buildings.

○ Introduce a ban on the use of leasehold for new flats to ensure that
in future commonhold is the default tenure for flatted development.

○ Implement a new process for converting to commonhold to make
conversion easier for existing leaseholders.

○ Cap ground rents at £250 per year, falling to a peppercorn after 40
years.

○ Abolish the disproportionate leasehold enforcement regime of
forfeiture, and replace it with a fairer system that strengthens
protections for leaseholders, removes the automatic risk of home loss
and protects leaseholders’ equity.

○ Repeal the draconian powers relating to enforcement
of maintenance charges (estate rentcharges) and require notice
before pursuing ordinary enforcement on freehold estates to protect
homeowners.

○ Amend enfranchisement provisions in the Leasehold and
Freehold Reform Act 2024 that make it cheaper and easier for
leaseholders to extend their lease or buy their freehold.

○ Create a new right for leaseholders in flats to request improvements,
such as a gigabit capable broadband connection.

● The draft Commonhold and Leasehold Reform Bill, published in January
2026, included all of the above measures apart from the necessary ‘fixes’ to
the Leasehold and Freehold Reform Act 2024 and provisions relating to
gigabit capable broadband connections. The Housing, Communities and
Local Government Committee are currently undertaking pre-legislative
scrutiny on the draft Bill. The Government will consider any recommendations
made by the Committee before introducing the Bill.

46
Territorial extent and application

● The Bill will extend and apply to England and Wales.

Key facts

● Each year an estimated 30,000 - 40,000 new flats are delivered across
England and Wales (HM Land Registry: Price Paid Data) and over 99 per
cent of flats for sale are sold as leasehold (Leasehold housing in England
Statistics, House of Commons Library). Commonhold offers a better
alternative to leasehold for flat ownership. Ownership is on a freehold basis
from the outset and owners are part of a commonhold association, which
gives them more control over their homes and greater opportunity to have a
say over key decisions affecting how their building is used, managed and
financed.

● The existing model of commonhold has not worked - there are fewer
than 20 commonholds despite the tenure being available for over 20
years (The Law Commission on Commonhold, July 2020). Without reform to
make commonhold workable for modern developments, including mixed-use
and mixed tenure blocks, that number is unlikely to increase.

● The Bill will ensure that existing leaseholders can take advantage of the
reinvigorated commonhold model. Although commonhold has been
available since the regulations came into force in 2004, we are aware of only
one conversion having taken place. The Commonhold and Leasehold Reform
Act 2002 requires 100 per cent leaseholder consent, freeholder consent and
lender consent, meaning a single hold‑out can derail the entire process. This
makes conversion virtually impossible except in the smallest and simplest of
blocks.

● Although actual forfeiture cases are thought to be relatively rare, the threat of
forfeiture is routinely leveraged by landlords to ensure compliance. In
2024, the Property Tribunal recorded 786 breach determinations, providing a
partial indication of how regularly in a given year landlords are taking formal
litigation steps towards forfeiting a residential lease. Stakeholder estimates
suggest 80 to 90 per cent of forfeiture cases are triggered by a financial
breach of a lease, which can be initiated for unpaid amounts of as little as
£350 (Draft Commonhold and Leasehold Reform Bill: Impact Assessment,
Annex 3).

● Approximately 3.8 million residential leaseholders in England and Wales
have a ground rent obligation. Of these, around 770,000 to 900,000 pay
over £250 a year in ground rent of which 490,000 to 590,000 are in London

47
 and the South. In total, leaseholders pay over £600 million per year in ground
rent (The ground rents cap, House of Commons Library).

● There are up to 1.75 million homes on private estates in England, where
estate rentcharges could apply, although we do not know how many of
these are privately managed (English Housing Survey 2020-21). Competition
and Markets Authority analysis shows over 80 per cent of new freehold
homes built by the 11 largest housebuilders have estate management
charges (Housebuilding market study).

● Rentcharge owners can currently take enforcement action without prior
notice once arrears reach 40 days, including taking possession of the
property, granting long leases (sometimes 99 years) to third parties that can
continue even after arrears are paid, or appointing a receiver with
mortgagee-like powers. These powers are widely regarded as
disproportionate and can create significant difficulties for homeowners,
lenders and prospective buyers.

● The Chair of the Leasehold Advisory Service, Martin Boyd, said “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 … 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.”

48