Commonhold and Leasehold Reform Bill 2026
Commonhold and Leasehold Reform Bill 2026
In January 2026, the Government published a draft Commonhold and Leasehold Reform Bill, confirming its intention to cap ground rent at £250 per annum. Prior to publication, there had been speculation that ground rents might instead be reduced to a peppercorn, in line with comments from some ministers.
The bill will now progress through Parliament and the Government has advised that their intention is to implement the changes proposed by the Bill in 2028. Together with the Leasehold and Freehold Reform Act 2024 (LAFRA), the new Bill represents a significant shift for landlords, tenants, lawyers, and valuers, all of whom will need to familiarise themselves with its proposals and the terms of LAFRA when they both comes into force.
The key proposals within the Bill are:
1. Ground rent cap
Existing long residential leases will have ground rent capped at £250 per annum.
After a 40-year transitional period, ground rent will then be reduced to a peppercorn.
New leases are already required to include a peppercorn ground rent pursuant to the Leasehold Reform (Ground Rent) Act 2022.
There will be a number of exemptions to the cap, but the bill does not set out a definitive list.
2. Commonhold to become the default for new developments
A key reform is the proposal that new developments will no longer be granted as leasehold. Instead, units will be sold as commonhold:
Each flat owner will hold the freehold of their individual unit.
A Commonhold Association, made up of all unit owners, will hold the freehold of the common parts.
This marks a substantial structural change to the traditional tenure model in England and Wales.
3. Additional reforms
The bill also proposes to:
Abolish forfeiture as a remedy.
Removing the draconian enforcement remedies in relation to estate rent charges.
Introduce various miscellaneous reforms aimed at modernising the leasehold system.
Given the litigation seen following the enactment of LAFRA, it is highly likely that certain provisions of the new bill will be challenged, particularly by affected landlord groups. Challenges may focus on valuation methodology, human rights impacts, and the enforceability of retrospective caps.
Both LAFRA and the new Commonhold and Leasehold Reform Bill signal a significant shift in the traditional property ownership structures. Whether commonhold will function effectively in practice, or whether market, lender, and consumer behaviour will adapt, remains to be seen.
