On 27 January 2026, the Ministry for Housing, Communities and Local Government published the draft Commonhold and Leasehold Reform Bill. The Bill, promised since March 2025 when the Commonhold White Paper was published, sets out the government's proposals for "reinvigorating commonhold", as well as other significant leasehold reforms. If enacted in its draft form, the Bill would represent a seismic shift in property ownership in this country by banning new leasehold flats, abolishing the remedy of forfeiture in existing leases, and enacting commonhold as the default tenure for new blocks of flats.
Commonhold proposals
Part 1 of the Bill re-invigorates commonhold as a form of tenure, as an alternative to leasehold ownership, and repeals Part 1 of the Commonhold and Leasehold Reform Act 2002. As covered by our previous article in a commonhold, all flat owners will each own their flat – known as "commonhold units" – as well as a share of the commonhold, being the common parts of building itself and the land it is situated on. Crucially, there is no landlord to a commonhold estate and there is no lease. Instead, there is a "commonhold association", membership of which will be open to unit-holders of commonhold units. The general rule set out by the Bill will be that the unit-holder will be entitled to be the member of the commonhold association in respect of the unit, and where two or more persons are unit-holders of the same unit they will both be entitled to be members (they will not, however, have additional voting rights as a result). A person who is a tenant under a "permitted long lease" (which includes shared ownership leases and home finance plan leases, as defined by the Bill) will be entitled to be the members in respect of that unit.
In place of the lease, the Commonhold Community Statement ("CCS") – "the commonhold's 'rulebook'" - will set out the rights, duties and powers of both unit holders and the commonhold association. It is expected that further regulations will follow as to the content and form of the CCS with a distinction to be made between "universal provisions" that need to be included within every CCS, as well as "local provisions" which can be included and will apply only to the specific commonhold in question.
The Bill sets out detail as to what land can be registered as commonhold, and the process for application, as well as who can be a member of a commonhold association. Regulations as to the content of articles of the commonhold association, as well as other aspects, such as enforcement regarding rights conferred or duties imposed, and the ability for leases entered into before the Bill comes into force, to be modified to be consistent with commonhold as a form of tenure, will follow.
As expected in the White Paper, the Bill proposes to afford the First-tier Tribunal with additional powers in relation to the appointment and removal of directors, amendments to the CCS, and the power for the tribunal to determine the value of commonhold land, in the context of a termination of commonhold.
Leasehold flats and ground rent
In the spirit of ensuring that commonhold is the default form of tenure, Part 2 of the Bill bans the grant or assignment of certain long residential leases of flats. This will include new residential developments that includes flats, including mixed use buildings, and houses converted to flats, as well as build-to-rent flats where the flats are subsequently sold by the developer instead of being rented out.
Under Part 3 of the Bill, the government will initially cap ground rent at £250 per annum for all existing leases. After 40 years, this amount will be reduced to a peppercorn.
Enforcement of long leases
By Part 4, the Bill proposes to abolish forfeiture, the process by which a long lease can be brought to an early end due to tenant default. Instead, "lease enforcement claims", as they are termed in the Bill, will need to be made where a tenant, a previous tenant, or a person who has agreed to guarantee the tenant or previous tenant's obligations, has breached the covenants in the long lease, provided that all of the pre-conditions for doing so are satisfied.
A "lease enforcement notice" will need to be sent, with the prescribed form to be set out by secondary legislation. However, before doing so, a final determination of the breach will first need to be obtained from the court, an arbitral tribunal or the appropriate tribunal, similarly to how section 146 currently operates in conjunction with section 168 of the Commonhold and Leasehold Reform Act 2002.
The court will not be able to make an order to terminate the lease, instead it will have the power to make a "remedial order", "order for sale" and/or a "costs order".
The proposed changes are intended to be a "fairer and more proportionate lease enforcement scheme benefitting both leaseholders and landlords".
Estate rentcharges
Part 5 of the Bill will require landowners to serve specific notices before enforcement action is taken with respect to arrears of estate rentcharges.
Consultation
Alongside publication of the draft Bill, the government has announced a consultation on the proposed ban on new leasehold flats, which is open until 24 April 2026. The consultation covers a variety of aspects, from the definition of "flat" to types of land ownership that should be exempt from the ban on new leasehold flats. The consultation can be viewed here.
Comment
The Bill represents the Government making good on its manifesto promises of bringing "the feudal leasehold system to an end", and making conversion to commonhold easier, which will likely be welcomed by many leaseholders.
It remains unclear whether the reinvigorated proposals to introduce commonhold will be palatable to lenders and developers, particularly as to whether it will represent an equivalent form of security to leasehold.
Moreover, whilst the reforms are proposed to improve the current homeownership system, it is unclear whether commonhold will in fact be the solution to the perceived problems with leasehold, or whether it will instead bring about similar problems in different forms. For stakeholders with a material interest in the outcome of these proposals, their first job will be to digest this latest development and then to meaningfully engage with the consultation before it closes on 24 April 2026.
