On 27th January 2026, the Government published the draft Leasehold and Commonhold Reform Bill, setting out a wide-ranging package of proposals designed to overhaul the residential leasehold system in England and Wales. The reforms are intended to address long-standing concerns around fairness, affordability and transparency for flat owners and buyers, and mark one of the most significant shifts in property law for a generation.
The announcement builds on earlier leasehold reforms and signals a clear direction of travel towards reducing financial burdens on leaseholders and promoting commonhold as the preferred form of flat ownership.
Ground Rent Cap on Existing Leases
One of the most eye-catching elements of the Bill is the proposed cap on ground rent payable under existing residential leases.
Under the draft proposals:
- Ground rent would be capped at £250 per year.
- After 40 years, ground rent would be reduced to a peppercorn, effectively zero.
- The changes would apply to most residential leasehold contracts entered into before July 2023.
This goes significantly further than the Leasehold Reform (Ground Rent) Act 2022, which abolished ground rent for most new leases from June 2022, by retrospectively addressing the impact of ground rent provisions in existing leases. For many flat owners, this could mean long-term savings and greater certainty over future costs.
Moving Away from Leasehold Flats and Promoting Commonhold
The Bill also reinforces the Government’s intention to move away from traditional leasehold ownership for flats altogether.
Key proposals include:
- A ban on new leasehold flats once a reformed commonhold system is fully in place.
- A strengthened and more flexible commonhold framework to make it a realistic alternative for developers and buyers.
- Easier routes for existing leaseholders to convert to commonhold, removing some of the barriers that have historically limited uptake.
Commonhold allows flat owners to own their property outright while jointly owning and managing the building, rather than relying on a landlord or managing agent. The Government has made clear that it sees commonhold as the long-term solution to many of the structural problems associated with leasehold ownership.
Ending Forfeiture for Small Debts
Another significant proposal is the abolition of forfeiture as it currently applies to residential leasehold property.
Forfeiture allows a landlord to take back a leaseholder’s property for breach of lease, sometimes for relatively small arrears. Under the new proposals:
- Forfeiture would be replaced with a fairer, court-based enforcement process.
- Leaseholders would no longer face the risk of losing their home over minor or disputed sums.
This reform addresses one of the most widely criticised aspects of the leasehold system and is intended to bring enforcement mechanisms more in line with modern expectations of proportionality and consumer protection.
Greater Transparency Around Service Charges and Estate Fees
The Bill also aims to improve transparency and accountability in relation to service charges and estate management fees.
Proposals include:
- Clearer information for leaseholders about what they are being charged and why.
- Stronger rights to challenge unreasonable or unclear charges.
- Action to address so-called “fleecehold” arrangements, where homeowners face ongoing estate charges despite owning their property freehold.
While the Bill does not introduce a cap on service charges, the emphasis on transparency and accountability is likely to be welcomed by many homeowners.
What This Means for Owners and Buyers
For existing leaseholders, the reforms promise greater protection, reduced long-term costs and improved control over their homes. For buyers, particularly those considering flats, the changes could improve confidence in the leasehold market and reduce some of the risks traditionally associated with this form of ownership.
The proposals also have wider implications for the property market, including how flats are valued, sold and managed, and how future developments are structured.
Looking Ahead
This draft Bill represents the most comprehensive attempt to reform the leasehold system in decades. It builds on earlier legislation and reflects a clear policy commitment to rebalancing the relationship between leaseholders and freeholders, while modernising the legal framework for flat ownership.
The Bill is now subject to pre-legislative scrutiny and consultation, meaning further detail will emerge on how and when these changes will be implemented. However, the overall direction is clear: ground rents are being brought under control, commonhold is being repositioned as the default model for flats, and some of the most controversial features of historic leasehold law are being dismantled.
Rowlinsons Solicitors will continue to monitor developments closely and provide clear, practical guidance as these reforms progress, helping clients understand how the changes affect their rights, responsibilities and property decisions.