Leasehold Reform in the UK: A Comprehensive Guide for Leasehold Owners, Buyers and Sellers

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Leasehold reform has been a topic of debate in the UK for decades. In January 2026, the government finally published a Draft Commonhold and Leasehold Reform Bill, signalling the most significant shake-up of property tenure in England and Wales in over a generation. For conveyancers like us here at Step Legal professionals who guide clients through buying, selling and remortgaging property, this isn’t just another legislative change: it fundamentally reshapes the landscape of residential property ownership.

This article will guide you through everything you need to know as we embark on this new, exciting time. 

Why Reform Was Needed

The Problems with Traditional Leasehold

Under the traditional leasehold model:

• Homeowners don’t own the land on which their property stands they own the right to occupy for a set period (typically 90–999 years). It sounds strange too many, but this it the crux of Leasehold ownership
• Ground rent a recurring annual payment to the freeholder, can escalate over time with no benefit to the leaseholder.
• High or doubling ground rents can make properties unsellable and unmortgageable.
• Leaseholders often lack real control over building management, with costs and decisions driven by freeholders or managing agents. Equally, these costs can be exorbitant, potentially bankrupting leasehold owners when common parts require extensive work. 

These issues have impacted millions of households. Anecdotally and in practice, many conveyancers have seen deals fall through because lenders refuse mortgages when ground rent is high or doubling. Clients frequently ask: “Why can’t I own the freehold? Why should I pay rent for a property I own?” questions the reform aims to address.

The Draft Commonhold and Leasehold Reform Bill — What’s in It?

The 2026 draft Bill builds on previous changes such as the Leasehold Reform (Ground Rent) Act 2022 (which banned ground rent on most new leases) and earlier enfranchisement reforms. The new proposals go significantly further. 

Capping Ground Rents on Existing Leases

Perhaps the most immediate and headline-grabbing change is the cap on ground rents:

• Ground rents on existing leases will be capped at £250 per year initially.
• Over time (40 years), this cap will reduce to a peppercorn (effectively zero), bringing older leases into line with modern practice.
• This builds on the 2022 Act which already ensured new long leases began with zero ground rent. 

Ban on Future Leasehold Flats

One of the most transformational proposals is the outright ban on the sale of new leasehold flats in England and Wales.

• From the point the legislation is enacted, developers will not be able to sell flats on a leasehold basis.
• Instead, commonhold will become the default tenure for new flats  an outright ownership model with shared responsibility for communal areas. 

This marks a fundamental shift from leasehold as the norm for flats an archaic system that has existed for centuries to a model that mirrors modern ownership structures in many other countries.

Easier Transition to Commonhold for Existing Buildings

In the current system, converting an existing block of flats to commonhold is very difficult due to the requirement for 100% consent needed from leaseholders, lenders and the freeholder. The draft Bill proposes:

• Reducing consent thresholds for conversion (e.g., from 100% to 50% of qualifying leaseholders in certain circumstances).
• Simplified processes for enfranchisement and management takeover. 

Abolition and Reform of Forfeiture

Under existing law, landlords could forfeit a lease (i.e., repossess the property) for relatively small debts, for example, unpaid ground rent or service charges. The draft Bill proposes:

• Abolishing forfeiture for small debts.
• Replacing it with fairer, court-led enforcement. 

This is a notable shift in how breaches are treated. Conveyancers will need to explain this to clients as part of due diligence in transactions and when advising on lease compliance issues.

Other Structural Reforms

The Bill also tackles related issues that affect conveyancing practice:

• Greater transparency around service charges and insurance commissions.
• Changes to enfranchisement rights and lease extension terms.
• Reduction or abolition of ‘marriage value’ in valuation calculations.
• Improved statutory rights to manage and buy freeholds. 

These are technical but important points. Conveyancers advising on valuations, enfranchisement premiums and lease extensions will need to update their procedural checklists and client guidance accordingly.

So, What Exactly Is Commonhold?

Commonhold was introduced in UK law in 2002 through the Commonhold and Leasehold Reform Act 2002. However, it has rarely been used in practice. To put it in perspective, there are estimated to be fewer than 20 registered common developments across all of England and Wales.

How Commonhold Works

• Owners of individual units (e.g., flats) each own the freehold of their unit indefinitely no expiration date.
• Owners collectively own and manage the shared parts (e.g., hallways, roofs, gardens) through a commonhold association.
• Decisions about maintenance and communal expenditure are taken by the unit owners, much like a homeowners association.
• There is no landlord to pay ground rent to and no risk of forfeiture for ground rent arrears. 

For many leaseholders, commonhold addresses the core frustrations of leasehold: lack of control, opaque costs and the spectre of escalating charges.

Impact on the Property Market & Conveyancing Practice

For Buyers

• Buyers of new flats will increasingly encounter commonhold titles rather than leases. Conveyancers will need to explain how commonhold differs from leasehold including issues like voting rights, management responsibilities and liabilities for shared costs.
• Buyers may be more confident about longer-term ownership without leases that lose value as their term shortens.

For Sellers

• Properties with previously problematic ground rent clauses may become easier to sell and mortgage now that ground rents are capped.
• Sellers of leasehold properties may need to explain how reforms affect their title and prospective buyers’ mortgage prospects.

Final Thoughts

The Draft Commonhold and Leasehold Reform Bill 2026 is more than another housing policy  it’s an effort to shift the very foundations of how residential property is owned and managed in England and Wales. For buyers, sellers and conveyancers alike, it presents challenges, but so much opportunity.

In the coming months and years, as the Bill progresses through Parliament and becomes law, conveyancers like us, will play a pivotal role in interpreting, implementing and normalising these reforms for everyday homeowners and investors alike, and we can’t wait to help. 

If you require a team of expert conveyancers for buying or selling property, whether leasehold or not, Step Legal can provide the guidance, assistance and advice you need.

Contact us on 01782 651144, visit our website at https://www.steplegal.co.uk/ or email us via enquiries@steplegal.co.uk to receive a free fixed-fee quote today.