Home » Draft Commonhold and Leasehold Reform Bill FAQs
4938640D-D775-455A-B95E-99DF6ACBD1B3 05F36BE4-C2D2-4DFA-A636-A1AA63ED4296

Understanding the Draft Commonhold and Leasehold Reform Bill

On 27 January 2026, the Government published the Draft Commonhold and Leasehold Reform Bill which, if implemented, could significantly change the way residential property is owned and managed in England and Wales. The proposals are intended to expand and reform the commonhold ownership model for flats, making it easier for existing leaseholders to convert to commonhold, and preventing the use of leasehold for all new flats.

The Bill proposes measures affecting existing leaseholders, including a cap on the existing contractually payable ground rent at £250 a year, with this reducing to a peppercorn after 40 years. It would also abolish forfeiture and replace it with a new lease enforcement framework, intended to establish alternative mechanisms for enforcing breaches of obligations in leases.

It is important to note that these proposals are not yet law. The Bill is in draft form and will undergo pre-legislative scrutiny before being introduced to Parliament for formal debate and consideration.

FAQs:

  • Does this change anything for leaseholders right now?

    The publication of the Draft Bill does not change the law at this stage. It is a draft, subject to further scrutiny and debate in Parliament and is not in final form.

    As a result, there is no immediate impact on leaseholders’ rights or responsibilities. All existing leases remain fully valid, and the announcement does not alter current ground rent terms or the obligations on leaseholders and freeholders.

  • What does the Draft Bill say about ground rent?

    The Draft Bill includes a proposed £250 cap on the existing contractually payable ground rent, and after a transition period of 40 years, a reduction of the cap to a peppercorn, or zero value. Until or unless these proposals are enacted in legislation, ground rent continues to be payable at the levels set by the terms of individual leases. Housing Minister, Matthew Pennycook MP, confirmed in a statement in Parliament on 27 January 2026 that until the legislation is effective “people will continue to pay their existing ground rents”.

  • Does the Draft Bill affect existing service charge arrangements?

    The Draft Bill currently contains no proposed reforms or changes to existing laws and regulations governing service charges for leasehold homeowners.

    There are proposed reforms included in the Draft Bill for freehold homeowners paying estate rentcharges, including changes to the way failures to pay rentcharge contributions can be enforced.

  • Who could be affected if the Bill becomes law?

    If introduced, the proposed cap on ground rent in its current form would apply to leaseholders in England and Wales with long residential leases that include a current ground rent of more than £250 a year, or a ground rent that is expected to surpass £250 a year in 40 years after the proposed cap becomes enacted as a result of existing rent review terms. For all leases, including those where the ground rent will not exceed £250, the amount payable will become a peppercorn, zero value in 40 years after the proposed cap becomes enacted.

    The reforms would also have far-reaching implications for future homebuyers, freeholders and lenders, as part of a wider shift away from leasehold ownership towards commonhold. The precise impact will depend on the final version of the legislation agreed by Parliament.

  • What is the RFA’s position?

    The RFA has always welcomed reforms to the leasehold sector that deliver meaningful benefits for leaseholders, particularly where they improve transparency, fairness and accountability for service charges and professionalise the property management sector.

    However, the RFA does not consider that the Draft Bill achieves these aims, or that capping the existing contractually payable ground rent and undermining leasehold tenure in favour of commonhold will do anything to improve the experience of homeowners, particularly those living in blocks of flats.

    The inclusion of the ground rent cap in the Draft Bill represents a wholly unjustified interference with existing property rights. If enacted, it would seriously damage investor confidence in the UK housing market and risks widespread freeholder insolvency. The resulting forced exit of professional freeholders from the sector would hinder the delivery of building safety projects, disrupt the day-to-day lives of residents, and lead to even higher service charge costs and difficulties securing mortgage finance.

    The RFA has consistently emphasised the importance of legal certainty and proportionality and has cautioned against reforms that risk unintended consequences for homeowners, freeholders, lenders and the wider residential property market. Instead, the RFA supports reforms that deliver real-world benefits leaseholders care most about, such as regulating managing agents, improving transparency, and raising professional standards.

  • What happens next?

    The Draft Bill will need to be introduced to Parliament before it can become law and will be subject to debate, amendment, and approval by both the House of Commons and the House of Lords.

    The Draft Bill will first be examined by the Housing, Communities and Local Government Committee in the House of Commons. In line with Cabinet Office guidance, pre-legislative scrutiny of draft bills typically takes three to four months, excluding parliamentary recess, and includes evidence-gathering and the preparation of a final report.