The Commonhold and Leasehold Reform Bill was published on 27 January 2026 and is part of the Government’s shake-up of the “outdated leasehold system.”
The Bill replaces the existing leasehold regime, it bans the creation of new leasehold flats, caps existing ground rents, abolishes forfeiture of residential leases and regulates estate rentcharges. It seeks to make commonhold the default tenure in England and Wales.
The overall aim of the Bill is to rebalance the landlord and tenant relationship in favour of home owners.
Part 1 of the Commonhold and Leasehold Reform Act 2002 which first introduced commonhold as a form of tenure will be repealed. Since its introduction in 2004, commonhold has been taken up at fewer than 20 developments in the UK.
Commonhold is a form of ownership where residents collectively own and manage their building. Each flat owner (known as a “unit holder”) owns their flat as a freehold and a “commonhold association” owns the common parts.
Summary
The Bill will make an extensive number of amendments:
- It will simplify the conversion of existing leaseholds to commonhold by reducing the leaseholder consent threshold from 100% to 50% of qualifying leaseholders;
- It will introduce sections within a commonhold, allowing for the management of mixed use buildings;
- The Commonhold Community Statement will codify the governance of commonholds;
- Directors will be appointed through a procedure in the First Tier Tribunal (FTT);
- Developer voting power will be limited to reflect the units they still own;
- Rights will be reserved for developers where a site is not complete, with the FTT having power to review proposals;
- A Commonhold Association will be permitted to apply for an order to sell a flat to realise funds owed.
- Mixed use developments will be carved into sections (residential and commercial) to manage more effectively the building services.
New developments are to be registered as commonhold and each unit will be individually registered and initially held by the developer until they are sold.
Each unit holder can be a member of the commonhold association, which will be governed by a commonhold community statement, defining their rights, responsibilities and rules.
The Bill will prohibit the grant or assignment of new long residential leases of flats in relevant buildings.
This will apply to long residential leases (exceeding 21 years).
All new flats sold for home ownership will have to be sold as commonhold, rather than leasehold unless an exemption applies.
Timetable and Ground Rent Cap
There is no timetable given for when the provisions in the Bill will be implemented but an indication has been given that a ground rent cap could come into force in 2028. The Leasehold Reform (Ground Rent) Act 2022 banned landlords in England and Wales from charging more than a peppercorn rent in new leases. The bill will extend to existing leases by capping ground rents at £250 per annum, reducing to a peppercorn after 40 years from the commencement of the Act.
This cap will not have retrospective effect. This means that the landlords will not be obliged to reimburse leaseholders for payments of ground rent made before the cap comes into force.
Abolition of Forfeiture of Residential Leases
The Bill seeks to abolish forfeiture of residential leases and replace it with a new and more proportionate enforcement regime. Any provision in a lease which provides for termination by forfeiture will be unenforceable. The court can make a remedial order requiring specific action to be taken by the leaseholder or grant an order for sale. This is regarded as a less draconian remedy than forfeiture as the leaseholder will retain an equity in the flat.
