Big, bold and commonhold – full steam ahead for residential leasehold reform

This week, the UK Government published its long-awaited draft Commonhold and Leasehold Reform bill.

The bill is set to have wide-ranging ramifications for the residential property sector and represents a significant step in the UK Government’s stated ambition to reform and ultimately move away from the traditional leasehold model.

While the bill does not set out any specific timescales for implementation, its proposed reforms are likely to result in major structural changes; and we set out three of the key reforms in the bill below.

1. Capping of ground rents

For existing residential leaseholders, the Bill proposes a statutory cap on ground rents at £250 per year, with a transition to a nominal “peppercorn” rent after a further 40 years. While ground rents were banned in new leases after 2022, existing leases granted before then remained unchanged.

The intention is here to address long-standing concerns about escalating and unaffordable ground rent provisions, which have affected saleability and mortgageability of many flats. The measure is framed as consumer protection rather than immediate abolition, preserving some income stream for freeholders in the medium term while reducing financial pressure on leaseholders.

2. Abolition of forfeiture

Equally - or perhaps more - significantly, the bill proposes to abolish the existing forfeiture regime under which a residential lease can be terminated for breach, albeit subject to the requirement to have such breach either proved by way of a prior judicial determination or admission from the leaseholder. In its place, a new enforcement framework is proposed where a “lease enforcement claim” can be made by a landlord to seek remedies such as orders for sale or termination of sub-leases.

This is intended to remove what the Government has previously describes as a draconian remedy that grants landlords an unfair windfall if successful; replacing it instead with a new and alternative mechanism that balances enforcement rights with greater procedural fairness and protection for homeowners.

3. Shift towards commonhold and the long-term end of leasehold

Another central theme of the draft bill is the revitalisation of commonhold as the preferred form of ownership for flats.

Commonhold provides flat owners the ability to own their flats effectively as freeholds from day one, along with the right to join a commonhold association to jointly manage the common parts of the building and/or estate. In a commonhold structure, there is no third-party landlord or freeholder, and no ground rent is paid.

The bill is set to facilitates easier conversion from leasehold to commonhold, including by lowering consent thresholds, and supports a policy direction in which commonhold becomes the default tenure for new flats, with leasehold use significantly restricted. This forms part of a broader strategy to move towards the eventual phasing out of leasehold as a mainstream residential tenure.

To this end, the UK government has also launched a consultation entitled “Moving to commonhold; banning leasehold for new flats” calling for responses by 24 April 2026.

This consultation seeks views from all property industry stakeholders on a range of topics on the subject, including the scope of the ban on leasehold, exemptions, proposed timings, and the wider proposed legal framework for commonhold.

Next steps

While the bill remains in draft form and subject to scrutiny, consultation and likely amendment before becoming law, the policy direction of the bill is clear - a real move away from leasehold in the residential property sector, with restrictions being placed on landlord rights in favour of consumer leasehold protections.

The focus now will be on how the proposed reforms evolve through consultation and pre-legislative review, along with how effective implementation and transitional arrangements prove to be in the short to medium term.

In the meantime, all stakeholders – whether leaseholders, landlords, investors, property agents or developers - would be well-advised to monitor developments in the coming weeks and months to best prepare for their next steps.

How Hamlins can help

The Hamlins Real Estate Disputes team has expertise in both commercial and residential matters.

Our Real Estate team offer clients the full complement of real estate services, including commercial property, finance, litigation and construction.

We seek to obtain the best outcome possible for every client, no matter how big or small the issue may be.

If you would like a conversation to find out how we might help you, please get in touch.