If you own a leasehold property — especially a flat — you’ve probably felt the frustration of rising ground rents, restrictive lease terms, costly extensions, and limited control over your own home.
For many leaseholders, these features have made selling a property harder, delaying transactions or reducing buyer interest.
In early 2026, the UK government published a Draft Commonhold and Leasehold Reform Bill designed to overhaul this system. The reforms aim to make property ownership fairer for millions of people, but the changes are complex, long-running, and potentially far-reaching for anyone selling, buying, or living in leasehold homes.
This article cuts through the legal language and explains what the reforms could mean for you.
What is ‘leasehold’ and why leasehold reform matters
Leasehold is a form of property ownership in England and Wales where you own your home for a fixed period but not the land underneath. That land is owned by a freeholder, and leaseholders often pay ground rent, service charges, and other fees that can affect affordability and mortgageability. Commonhold, by contrast, is a system that gives flat owners freehold ownership of their individual unit and shared control of communal areas — similar to strata title in other countries.
Leasehold reform has been on the political agenda for years because many leaseholders find the leasehold system unfair, expensive, and difficult to navigate. Previous legislation, such as the Leasehold Reform (Ground Rent) Act 2022, already ended ground rent on new leases, but the broader system remains largely unchanged.
The new bill in a nutshell
In late January 2026, the government published a draft Commonhold and Leasehold Reform Bill for consultation and pre-legislative scrutiny. The bill aims to:
- Cap ground rents at £250 per year for existing leaseholders (with a longer-term aim of reducing to a nominal “peppercorn” rent).
- Phase out the creation of new leasehold flats in favour of commonhold ownership.
- Expand commonhold as the default tenure for new flats, giving homeowners more direct control.
- Improve protections against unfair practices, abolish the draconian forfeiture regime, and modernise lease enforcement.
These reforms build on previous laws, but they go significantly further by changing the structure of how homes can be owned and managed.
What’s changing for existing leaseholders
Ground rent cap
One of the most talked-about changes is the proposed cap on ground rents at £250 per year for existing leaseholds in England and Wales. In practice, this means that leaseholders paying much higher rents could see those costs significantly reduced once the legislation comes into force.
This matters because high ground rents have historically made some properties harder to sell or remortgage — lenders are often reluctant to approve mortgages on properties with escalating ground rent obligations.
Commonhold expansion
Under the bill, leasehold flats will no longer be created for new developments. Instead, commonhold will become the default structure for multi-occupancy buildings. Commonhold allows owners to collectively own and manage their building, without a separate freeholder holding the land.
This reform is significant because commonhold has not taken off since it was introduced under the Commonhold and Leasehold Reform Act 2002, partly due to lack of market uptake and structural uncertainty. The new bill seeks to make commonhold far more mainstream.
For sellers, this means future buyers may feel more confident about purchasing flats with commonhold ownership, as it removes ongoing ground rent and aligns ownership more closely with freehold logic.
What the draft leasehold reform bill doesn’t yet do
It’s important to be clear: the draft bill is not yet law, and many of its provisions are subject to consultation, parliamentary scrutiny, and eventual enactment — which could take years.
- The government has signalled that full implementation might not occur until 2028 or later.
- Some lease extension and forfeiture reforms from earlier legislation (such as the Leasehold and Freehold Reform Act 2024) have not yet been fully brought into force despite being law on the books.
So while the direction of travel is clear, the timing and detail are still unfolding.
Why this matters for sellers
Clarity and mortgageability
Homes with expensive or unpredictable ground rents can still struggle to attract buyers or secure mortgage offers. By capping ground rents and encouraging commonhold, the reforms could reduce one key barrier to sale for affected properties.
Confidence and buyer pool
Properties that are easier to finance and come with clearer ownership structures tend to attract more interest from buyers. If commonhold becomes standard for new flats and historic leaseholds become less punitive, the buyer pool for flats may grow, reducing the risk of fall-throughs or discounting.
Transitional complexity
However, for sellers today, the reform landscape is complex. Many leases will still be in force for years, transitional arrangements will apply, and buyers and lenders will be looking for certainty — not promises of future reform.
The politics and industry reaction
Leasehold reform has bipartisan roots but has become politically charged.
- Labour leadership has defended the ground rent cap and commonhold-first approach as delivering on long-standing promises to reduce unfair housing costs.
- Some landlord groups and freehold investors have criticised the retroactive aspect of the reforms, arguing it may undermine investment confidence or disrupt existing contracts. For example, M&G, a UK asset manager, expects a significant one-off financial impact from the reform on its ground rent assets.
These debates matter because the final form of the legislation will be shaped not just by policy intent but by market, legal, and economic pressure.
What sellers should look out for
For sellers grappling with leasehold complications, this reform agenda represents hope and potential relief — but not certainty in the short term.
Here’s what to monitor:
- The draft bill still needs to pass through Parliament and receive royal assent before it becomes law.
- Even after an Act is passed, the government must issue regulations that bring specific provisions into force. That can take additional months or years.
- Buyers and lenders will adjust expectations as clarity emerges. Confidence often grows only when the detail, timing, and enforcement rules are known.
For someone selling a leasehold property now, the message is practical realism with optimism: these reforms could reduce barriers and costs over the long term, but your immediate sale strategy should be based on current conditions, not future legislation.
In summary
The Commonhold and Leasehold Reform Bill represents the most ambitious attempt yet to modernise a system that many find archaic and unfair. For ordinary leaseholders — particularly flat owners — the proposed changes could mean:
- lower predictable costs
- more ownership control
- broader appeal to buyers
But the reforms are still in draft, may not take effect until 2028 or beyond, and will face political and legal scrutiny.
For sellers navigating today’s market, leasehold issues remain a real factor. Consider reform as a positive backdrop, but make decisions based on today’s legal and market realities.
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