Following the recent announcement on the proposed ground rent cap, the Government has published the draft Commonhold and Leasehold Reform Bill for pre-legislative scrutiny. The move signals a major shift in how flats will be owned and managed in England and Wales and an intention to end the “feudal leasehold system”.
Although the Bill is still in draft form and may change, the key proposals are summarised below.
Ground Rent Cap
The first major policy which was announced was the introduction of a £250 cap on ground rents, which is an annual or periodic charge which leaseholders must pay to freeholders and affects around 3.8 million leasehold properties in England and Wales. This will change to a peppercorn rate after 40 years. We covered this announcement about the £250 Ground Rent Cap in a recent article here.
Modernising Flat Ownership with Commonhold
Commonhold allows flat owners to hold freehold title to their individual units while collectively managing shared areas. Unlike leasehold, there is no risk of lease expiry or escalating ground rent.
The Bill proposes changes to make commonhold a practical alternative:
- Easier conversion from leasehold, requiring only a majority of qualifying owners rather than unanimity.
- Flexible structures for mixed-use developments.
- Stronger governance with tribunal oversight for disputes.
Phasing Out New Leasehold Flats
The Bill intends to stop most new long residential leases for flats, making commonhold the default for new developments. Existing leasehold flats will remain unaffected.
Some exemptions are expected, such as:
- Shared ownership schemes.
- Certain home finance arrangements.
The exact list will be confirmed following public consultation.
Removing Forfeiture as a Remedy
The Bill abolishes forfeiture as a remedy for breaches of long residential leases. Forfeiture has widely been criticised for enabling landlords to terminate leases and gain possession of a home following the breach of a lease term.
Instead, landlords would rely on a new statutory enforcement framework, allowing courts to impose proportionate remedies such as remedial orders, sale orders, or costs orders. This will strengthen protections for homeowners, allowing them to feel safer in their own homes.
Reform of Estate Rentcharges
The Bill removes the powers currently available to estate rentcharge owners, such as the ability to take possession of property for non-payment. Currently, homeowners can lose control of their property over a relatively small debt, even if they do not realise that they owe the freeholder money.
Rentcharge owners would instead be required to serve a formal demand and recover arrears through proportionate routes, such as court proceedings.
Our thoughts
This Bill represents one of the most significant shifts in residential property law in decades. By strengthening commonhold, ending most new leasehold flats, and rebalancing enforcement powers, it signals a clear move away from the traditional leasehold model.
If you are a leaseholder, freeholder, developer, or managing agent and want to understand how the proposed reforms could affect you, our property law team can help. Get in touch to discuss your position and prepare for the changes ahead.
Have questions? Get in touch today!
Call our office on 020 7928 0276, we will be taking calls from 9:30am to 6:00pm.
Email us on info@lisaslaw.co.uk.
Or, use the contact form on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/contact/
For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.
