The Draft Commonhold and Leasehold Reform Bill was published on 27 January 2026 and is currently before a Joint Parliamentary Committee for pre-legislative scrutiny. It is not yet law. The Government expects to introduce a final Bill to Parliament in the autumn 2026 session. This post reflects the Bill as published and Neon's analysis of its likely practical impact.
Quick Answers: What You Need to Know Fast
Is the Draft Commonhold and Leasehold Reform Bill 2026 already law?
No. It is a draft Bill in pre-legislative scrutiny. It does not create legal rights until a final version is passed by Parliament and brought into force.
Will existing leasehold flats automatically become commonhold?
No. Existing leaseholds would not convert automatically. Conversion would be voluntary and would require agreement and lender involvement.
What should leaseholders and RTM directors do now?
Audit leases, ground rent provisions, lease lengths, ownership profile, and service charge systems, then monitor the Bill as it develops.
The short answer: the Draft Commonhold and Leasehold Reform Bill 2026 is a proposed reform package designed to make commonhold the standard model for new flats, cap some existing ground rents, and make leasehold extension and enfranchisement cheaper and more predictable. It is a major signal of direction, but it is not yet law.
What matters practically right now: do not assume automatic rights, do not rush into unnecessary lease variations, and do make sure your documentation, governance, and building records are clean enough to respond when the final legislation arrives.
Key Takeaways
The Bill is important, but it is still only a draft
Nothing changes legally until a final Act is passed and the relevant commencement dates are set.
Commonhold is the long-term direction of travel
The Government is clearly signalling that leasehold should stop being the default model for new flats in England.
Existing leaseholds would not be forced to convert
Most buildings will remain leasehold unless owners actively choose to pursue conversion.
Ground rent reform matters most for older leases
Blocks with legacy ground rent clauses should review their leases now so they understand their exposure.
RTM directors are better placed than most
But managing a block today is not the same as being fully prepared for commonhold governance tomorrow.
Preparation beats panic
The best next step is not rushing. It is organising lease data, governance, and management systems now.
Why Is This Bill Happening Now?
England has one of the most unusual property ownership systems in the world. Around 5 million people own their home on a leasehold basis — a structure where you pay a substantial sum for a flat but technically only own a time-limited interest in it, while a separate freeholder owns the building and the land beneath it.
The problems this creates are well-documented: escalating ground rents, onerous lease extension costs, permission fees for minor alterations, poor service charge transparency, and the ever-present risk of a lease falling below 80 years — the threshold at which extending becomes significantly more expensive. For decades, leaseholders have been subject to a system that critics describe as feudal.
Two prior attempts at reform — the Leasehold Reform (Ground Rent) Act 2022 and the Leasehold and Freehold Reform Act 2024 — made incremental progress but fell short of the structural overhaul campaigners demanded. The 2026 Bill is intended to finish the job.
The catalyst was a 2025 Law Commission report recommending commonhold as the long-term default for all new residential flats, coupled with political pressure from cross-party leaseholder groups and a Government consultation that received over 11,000 responses.
What Is Commonhold — and Why Does It Matter?
Commonhold means owning your flat outright rather than holding a diminishing lease. Instead of a separate freeholder controlling the building, owners collectively participate in a Commonhold Association that owns and manages the common parts.
Commonhold exists already — it was introduced by the Commonhold and Leasehold Reform Act 2002 — but it has been almost entirely unused. Fewer than 20 commonhold buildings exist in England and Wales. The problem is structural: mortgage lenders have been reluctant to lend on commonhold properties, and developers have had no incentive to build them given the lucrative ground rent income that leasehold generates.
The 2026 Bill proposes to change that by removing the barriers to commonhold adoption and — critically — making it the default form of ownership for new-build flats once the legislation is fully in force.
| Feature | Leasehold Current | Commonhold Proposed |
|---|---|---|
| Ownership type | Time-limited interest (e.g. 99–999 years) | Outright ownership of your unit, indefinitely |
| Ground rent | Payable to freeholder (historically escalating) | None — peppercorn only |
| Building management | Controlled by freeholder or their managing agent | Controlled by Commonhold Association (all unit owners) |
| Service charges | Set by freeholder; disputes via First-tier Tribunal | Set and voted on collectively by unit owners |
| Lease extension | Required; increasingly expensive below 80 years | Not applicable — no lease to extend |
| Permission fees | Payable for alterations, subletting, pets | Governed by Commonhold Community Statement |
| Sale of property | Subject to freeholder consent conditions | No freeholder consent required |
| Mortgage availability | Well-established | Bill includes provisions to unlock lender participation |
The Five Key Provisions of the Bill
Commonhold as Default
New-build residential flats will be required to be sold as commonhold rather than leasehold from a date to be set in secondary legislation.
Ground Rent Cap
Existing ground rents capped at £250/year in London and £100/year elsewhere. New leases: peppercorn only.
Voluntary Conversion
Existing leasehold blocks can convert to commonhold by agreement. The process will require mortgage lender consent.
Enfranchisement Reform
Simplified and cheaper process for leaseholders to buy their freehold collectively or extend their lease.
Valuation Methodology
New calculation rules aim to remove marriage value and reduce extension costs for many shorter leases.
The Bill does not automatically convert existing leaseholds to commonhold. It does not abolish leasehold for commercial properties or houses. It does not remove service charges — these continue under commonhold, managed by the Commonhold Association. And it does not apply to Northern Ireland, Scotland, or Wales, which have separate property law regimes.
The Ground Rent Cap: What It Means in Practice
The practical meaning of the proposed ground rent cap is simple: if your existing lease charges more than the permitted threshold, the draft legislation aims to restrict what can be collected once the relevant provisions are in force.
Ground rent has been the most controversial element of the leasehold system. The Leasehold Reform (Ground Rent) Act 2022 already reduced ground rent to a peppercorn for new leases created after June 2022. The 2026 Bill goes further by targeting existing leases.
Under the proposed provisions:
- Ground rents exceeding £250 per year in Greater London or £100 per year elsewhere would be unlawful from a commencement date to be set
- Freeholders would be required to reduce rents to the relevant cap
- Leaseholders who have historically paid escalating ground rents would see these frozen at the cap
- A limited tribunal mechanism will allow freeholders to apply for an exemption in narrow circumstances
For context, the previous doubling-ground-rent scandal saw some leaseholders' rents scheduled to exceed £10,000 per year by mid-century. The cap addresses this — but the precise transition mechanics are still being worked out through scrutiny.
The ground rent cap is genuinely significant for the blocks we manage where historic leases carry above-threshold rents. If you are unsure what your current ground rent position is — particularly for pre-2022 leases — this is the time to check your lease documentation. We review this as part of our standard block management onboarding.
Voluntary Conversion to Commonhold: How It Would Work
Conversion to commonhold would be a legal and operational project, not a simple administrative switch. That is why this reform matters most to organised blocks with strong governance and clear records.
The Bill creates a pathway for existing leasehold buildings to convert to commonhold voluntarily. This is a significant undertaking that requires:
All leaseholders, or a qualifying majority depending on the final wording, must agree to convert. A single dissenting leaseholder may be able to block conversion under current draft provisions.
Every leaseholder's mortgage lender must consent. The Bill includes provisions to compel lenders to engage with applications, but this remains one of the most technically complex areas.
A company limited by guarantee must be incorporated. This body will own the common parts and manage the building collectively on behalf of all unit owners.
This document sets out unit owners' rights and obligations. A Government-prescribed template will be provided, but legal input is strongly advisable.
The conversion is completed by registration. At that point, all existing leases are extinguished and replaced with commonhold ownership.
Conversion is irreversible. Once a building is registered as commonhold, it cannot revert to leasehold. This makes the decision consequential.
If your building currently has an RTM company in place, conversion to commonhold is conceptually more straightforward because you already have a collective management structure and a working relationship among leaseholders. For buildings where leaseholders have had no collective management experience, the step up is more significant.
Leasehold Enfranchisement: What Gets Easier
Even if your block never converts to commonhold, the enfranchisement changes may still matter financially. For many leaseholders, that could be the most important part of the reform package.
The headline changes are:
- Removal of marriage value for many leases under 80 years, reducing extension costs for affected leaseholders
- Simplified participation thresholds for collective enfranchisement
- Prescribed valuation methodology aimed at more predictable and lower costs
- New 990-year standard extension term at a peppercorn ground rent
For a detailed walkthrough of the enfranchisement process and how the 2026 changes affect valuation, see our guide to leasehold enfranchisement in 2026. For the full context of Right to Manage — a related but distinct route to collective control — see our Right to Manage guide.
What This Means If You Are a Freeholder
The Bill represents a significant reduction in the value of residential freehold interests. The investment model that saw freeholds traded as financial instruments — generating income from ground rents, lease extension premiums, consent fees, and insurance commissions — is explicitly what the legislation targets.
Freeholders and their managing agents should expect:
- Ground rent income to fall and in many cases disappear entirely once the cap commences
- Increased lease extension and enfranchisement claims as costs reduce
- Pressure to consent to conversions in qualifying cases
- Scrutiny of service charge practices as transparency duties expand
For freeholders managing blocks professionally through an agent, the practical management obligations do not disappear under commonhold — they transfer to the Commonhold Association. If you currently hold the freehold on a block where leaseholders have already exercised Right to Manage, the direction of travel toward commonhold is already clear.
For a full breakdown of freeholder responsibilities — including your obligations around Section 20 consultation, building safety, and insurance — see our guide to block management.
Parliamentary Timeline: When Does This Become Law?
The key practical point: nothing in the Bill takes legal effect until it receives Royal Assent and commencement orders are made. Leaseholders should not assume rights exist before they are formally enacted.
What RTM Directors Should Do Now
If you manage through RTM, your advantage is not that reform will be easy — it is that you are already closer to collective governance than most blocks.
If you are currently running your building through a Right to Manage company, you are better placed than most to navigate the transition to commonhold — if and when you choose to pursue it. But there are practical steps worth taking now.
- Audit your lease terms and compile a clear record of lease lengths and ground rent provisions
- Understand your leaseholder composition, especially investor-owned versus owner-occupied units
- Review your service charge structure so it is robust enough for future reform
- Do not act prematurely on lease variations before the final legislation is settled
- Track the parliamentary timetable via Neon's Leasehold Reform Hub
The most common mistake we anticipate is RTM directors conflating "we already manage our building" with "we are ready for commonhold." The operational management of a building and the legal ownership structure are different things. Commonhold brings new corporate governance obligations on top of day-to-day management work. Plan for both layers.
Frequently Asked Questions
The Draft Commonhold and Leasehold Reform Bill 2026 is proposed legislation published on 27 January 2026. It aims to make commonhold the default form of ownership for new flats in England, cap existing ground rents, simplify lease extension and enfranchisement, and create a voluntary pathway for existing leasehold buildings to convert to commonhold.
It is currently in pre-legislative scrutiny and is not yet law.
Leasehold gives flat owners a time-limited interest in their property while a separate freeholder owns the building and land beneath it.
Commonhold gives flat owners outright ownership of their unit plus a share in a Commonhold Association that owns and manages the building collectively.
There is no freeholder, no diminishing lease, and no ground rent.
No. The Bill does not force conversion of existing leaseholds.
Conversion will be voluntary and will require agreement among leaseholders as well as consent from mortgage lenders.
Most existing leaseholds will remain leasehold unless the building's leaseholders actively decide to convert.
The Bill proposes capping ground rents for existing leases at £250 per year in Greater London and £100 elsewhere.
If your ground rent exceeds this amount, your freeholder would be required to reduce it to the cap once the legislation comes into force.
RTM directors should audit their lease terms, understand ground rent provisions, review service charge structures, and track the Bill's progress through Parliament.
Major legal decisions should not be made until the final legislation is enacted.
No. The two are separate.
The Renters' Rights Act 2025 applies to private rented tenancies, while the Draft Commonhold and Leasehold Reform Bill applies to flat ownership structures and is not expected to be enacted until later.
Tracking the Bill so you don't have to
The Commonhold and Leasehold Reform Bill will go through significant changes during its parliamentary passage. Neon monitors every amendment, consultation response, and commencement order — and translates it into plain-English action points for the blocks we manage.
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