Commonhold and Leasehold Reform Bill 2026 explained | August

The Commonhold and Leasehold Reform Bill 2026 explained

The Commonhold and Leasehold Reform Bill is the government's draft legislation to end the leasehold system for flats in England and Wales, make commonhold the default way to own a flat, and cap ground rents on existing leases. The government published it in draft on 27 January 2026 for pre-legislative scrutiny, and confirmed in the King's Speech on 13 May 2026 that it intends to introduce the final Bill to Parliament during the 2026 to 2027 session. As of June 2026 it is not yet law, and its main measures are expected to take effect in stages over the years that follow.

What the Commonhold and Leasehold Reform Bill proposes

The Bill is built around five main reforms.

It would ban the sale of most new leasehold flats and make commonhold the default tenure for new blocks, so that flat owners hold the freehold of their own unit and manage the building collectively rather than through a third-party freeholder. This completes the work of the Leasehold and Freehold Reform Act 2024, which already banned new leasehold houses.

It would cap ground rent on existing leases at £250 a year, reducing to a peppercorn (effectively zero) after 40 years. The government estimates that many of the roughly 3.8 million leaseholders paying ground rent would save significant sums over the life of their lease. New leases are already protected by the Leasehold Reform (Ground Rent) Act 2022, which set ground rent on most post-June 2022 leases at a peppercorn.

It would abolish forfeiture, the power that currently allows a freeholder to take possession of a leasehold flat over a debt as small as £350, and replace it with a more proportionate enforcement regime.

It would make conversion to commonhold easier by reducing the consent threshold from the current 100% of leaseholders, freeholder and lenders, which has made conversion almost impossible in practice, to 50% of qualifying leaseholders.

It would also reform estate management charges on privately managed freehold estates and implement Law Commission recommendations on enfranchisement, lease extensions and the Right to Manage.

How it differs from the Leasehold and Freehold Reform Act 2024

These are two separate pieces of legislation, and the distinction matters. The Leasehold and Freehold Reform Act 2024 is already law, passed in May 2024 and being brought into force in stages, and it deals mainly with lease extensions, enfranchisement, the Right to Manage and service charges. The Commonhold and Leasehold Reform Bill is the next and larger wave, still in draft, and it tackles the parts the 2024 Act left untouched: banning new leasehold flats, capping existing ground rents, and abolishing forfeiture. Where the 2024 Act ended new leasehold houses, this Bill aims to do the same for flats. Our guide to the Leasehold and Freehold Reform Act 2024 covers what is already in force.

When will the Commonhold and Leasehold Reform Bill become law?

The honest answer is that the timetable is uncertain and the measures will commence separately. The Bill was published in draft on 27 January 2026 for pre-legislative scrutiny by the Housing, Communities and Local Government Committee, alongside a "Moving to Commonhold" consultation on the scope and timing of the flat ban, which closed on 24 April 2026. The King's Speech on 13 May 2026 confirmed the final Bill would be introduced in the 2026 to 2027 session.

On timing, the government has been candid. The ground rent cap is widely expected to take effect around late 2028, following further regulations. The ban on new leasehold flats is likely to come much later: in an April 2026 speech the housing minister said it was highly likely the ban would not be switched on during this Parliament, which points to the late 2020s or the 2030s. The detail of how this is reported is set out in the House of Commons Library briefing on leasehold reform. Among the self-managing landlords we work with at August, the most common misunderstanding is that the Bill is already law; it is not, and there is a long road between a draft Bill and a commencement date.

What it means for leaseholders and landlords

For existing leaseholders, the most important point is that the ban on new leasehold flats is prospective only. Your existing leasehold flat is not converted or invalidated, and you can still sell, extend or vary your lease as now. The change most likely to reach you first is the ground rent cap, which would limit what you pay on an existing lease to £250 a year.

For landlords who own leasehold flats, the practical effect in the near term is on ground rent income rather than ownership: a freeholder-landlord's ground rent on existing leases would eventually be capped and then reduced to a peppercorn. Landlords who let a flat they hold on a lease are largely unaffected as leaseholders, beyond the same ground rent benefit. For developers and investors buying new-build, the direction is clear: new flats will in time be sold as commonhold rather than leasehold, which changes how blocks are structured and managed.

Across our conversations with landlords, the questions cluster around two things: whether existing flats are caught (they are not) and when the ground rent cap will actually arrive (later than most people assume). Until the Bill is passed and commenced, the current rules continue to apply in full.

If you own a leasehold or commonhold flat, keep your lease, ground rent and service charge records in one place with August.

Frequently asked questions

What is the Commonhold and Leasehold Reform Bill? 

It is the government's draft legislation to make commonhold the default ownership for new flats, ban most new leasehold flats, cap ground rents on existing leases at £250 a year, and abolish forfeiture. It was published in draft on 27 January 2026 and is not yet law.

When will the Commonhold and Leasehold Reform Bill become law? 

The final Bill is due to be introduced to Parliament in the 2026 to 2027 session. The measures will commence at different times: the ground rent cap is expected around late 2028, while the ban on new leasehold flats may not take effect until after this Parliament.

Will existing leasehold flats be banned? 

No. The ban applies only to new flats. Existing leasehold flats are unaffected, and owners can still sell, extend or vary their leases.

What is the difference between this Bill and the Leasehold and Freehold Reform Act 2024? 

The 2024 Act is already law and covers lease extensions, enfranchisement and the Right to Manage. The Commonhold and Leasehold Reform Bill is later and broader, proposing to ban new leasehold flats, cap existing ground rents and abolish forfeiture.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. The Bill is in draft and its provisions and timing may change. Always speak to a suitably qualified professional if you require specific advice or information.