The Draft Commonhold and Leasehold Reform Bill sets out proposed leasehold law changes in the UK, including changes to ground rents on existing leases, restrictions on new leasehold flats, reforms to forfeiture, and a stronger legal framework for commonhold.
Often referred to simply as leasehold reform, these proposals are not yet law. They were published on 27 January 2026 for consultation and parliamentary scrutiny.
If you are buying a leasehold flat, own a leasehold house, or live on a freehold estate with rent charges, here’s what could change and what it means for buyers and homeowners.
What has already changed under leasehold law in the UK?
Before looking at the new proposals, it’s important to understand what is already in force.
The Leasehold Reform (Ground Rent) Act 2022:
- Bans monetary ground rent on most new long residential leases (over 21 years).
- Requires new qualifying leases to reserve a peppercorn ground rent (effectively £0).
- Applies to certain lease extensions granted after June 2022.
It does not remove ground rent from older leases granted before that date.
The Leasehold and Freehold Reform Act 2024:
The 2024 act received Royal Asset in May 2024 and is designed to strengthen leaseholder rights within the existing leasehold system.
Some provisions of the act may not yet be in force, but significant changes included:
- Increasing the standard lease extension term to 990 years for flats and houses.
- Bringing house lease extensions in line with flats (peppercorn rent).
- Allowing leaseholders to extend or buy their freehold immediately upon purchase (removal of the 2-year ownership rule).
- Removal of marriage value from statutory valuation calculations.
- Expansion of collective enfranchisement rights in mixed-use buildings (raises non-residential threshold from 25% to 50%).
What does the Draft Commonhold and Leasehold Reform Bill 2026 propose?
The draft Bill focuses on five main areas which will impact both new and existing properties:
- Capping ground rents on existing leases
- Restricting new leasehold flats
- Reforming forfeiture
- Reforming estate rent charges
- Strengthening commonhold and enabling conversion
Will ground rents on existing leases be capped?
Under the draft Bill, many existing long residential leases granted for a premium would see ground rent capped at £250 per year.
After a 40-year transition period, that cap would reduce to a peppercorn (zero financial value).
This would affect older leases that still contain escalating or high ground rent clauses.
The cap would only take effect once legislation is passed and brought into force. Until then, the ground rent terms set out in existing leases continue to apply.
Will new leasehold flats be restricted under leasehold reform in 2026?
The draft Bill for leasehold reform proposes restricting the grant of new long residential leasehold flats.
The policy intention is to move towards commonhold as the default ownership structure for new flats.
However, this would apply to new developments and new leases, not existing flats. Certain exceptions (“permitted leases”) would still be allowed.
Timing and detail may change during parliamentary scrutiny.
If you already own a leasehold flat, these proposals do not remove your current lease.
What are the proposed changes to forfeiture under leasehold reform?
Forfeiture is the legal process that allows a landlord to terminate a lease for breach of its terms, including unpaid sums.
The draft Bill proposes replacing the current forfeiture regime with a new lease enforcement framework.
The aim is to prevent disproportionate loss of a home for relatively minor debts and retain fair enforcement rights for serious breaches.
Until the law changes, the existing forfeiture rules remain in place.
How will estate rent charges change on freehold houses?
This is particularly relevant for buyers of freehold houses on modern estates.
Estate rent charges are payments towards shared areas such as private roads, green spaces or drainage systems.
The draft Bill proposes repealing enforcement provisions in the Law of Property Act 1925 that currently allow strong remedies for unpaid estate rent charges.
The intention is to prevent disproportionate enforcement action.
For now, existing enforcement rights still apply.
What is happening with commonhold under the 2026 reforms?
Commonhold is a form of ownership where:
- You own your flat outright (freehold).
- The building’s communal areas are owned and managed collectively.
- There is no landlord and no lease term running down.
Commonhold has existed in England and Wales for years but has rarely been used.
The draft Bill proposes:
- A strengthened legal framework for commonhold associations.
- Clearer governance and financial management rules.
- A statutory process allowing certain leasehold buildings to convert to commonhold.
The aim is to make commonhold a workable alternative for future developments.
There is no requirement for existing leasehold buildings to convert.
What was previously proposed but is not included in the draft Commonhold and Leasehold Reform Bill?
Earlier government announcements referred to:
- 990-year lease extensions
- Removal of marriage value – an element of lease extension valuation when a lease has under 80 years remaining
- A simplified, standardised valuation formula
These measures are not included in the Draft Commonhold and Leasehold Reform Bill published on 27 January 2026.
They may form part of future legislation, but they are not currently in force and should not be relied upon when making financial decisions.
What does the Commonhold and Leasehold Reform Bill mean for buyers?
Buying a leasehold flat
You should:
- Check the remaining lease length carefully.
- Review the ground rent clause.
- Understand service charges and management arrangements.
Do not assume ground rent will automatically reduce in the short term.
Buying a leasehold house
Leasehold houses still exist, particularly on newer developments.
Under current law:
- Ground rent may still apply (unless caught by 2022 rules).
- You may have rights to extend the lease or buy the freehold.
The 2026 proposals do not yet change your current legal rights.
If you’d like a clear overview of how leasehold works, read our guide on leasehold explained.
Buying a freehold house on an estate
Estate rent charges may apply.
These are not leasehold charges, but they are ongoing payments for shared estate facilities.
The draft Bill proposes reform to enforcement, but current arrangements remain in force until legislation changes.
Will lease extension costs change under 2026 leasehold reform?
Under current law, extending a lease or buying a freehold can involve:
- A premium (based on statutory valuation).
- Your legal fees.
- The landlord’s reasonable legal and valuation costs.
- Disbursements (extra fees such as Land Registry charges and search fees).
- VAT where applicable.
Timescales vary depending on complexity and cooperation between parties.
The 2026 draft Bill does not yet change how lease extension premiums are calculated.
What should homeowners do now?
There is no need to make rushed decisions based solely on proposed reform.
However:
- If your lease is approaching 80 years, seek advice early.
- If you are selling, be transparent about lease length and ground rent.
- If you are buying, budget based on current legal obligations, not draft proposals.
Property law evolves, but transactions today are governed by the law currently in force.
If you are buying, selling, extending a lease, or dealing with estate rent charges, we will explain your position clearly and guide you based on the law as it stands today.
Call us on 0333 3055 249 or email info@leadingpropertylawyers.co.uk.
