Leasehold and freehold reform updates 2026: moving towards commonhold

In January 2026, the government published a draft Commonhold and Leasehold Reform Bill and launched a consultation on proposals to make commonhold the default tenure for new flats. These sit alongside proposals to cap existing ground rents and bring an end to lease forfeiture.

Ground rent changes

The government has announced plans to cap ground rents on existing residential leases at £250 per year, moving to a peppercorn ground rent after 40 years. The full details of this change are still to be established and current indications suggest that the changes may not be introduced until late 2028.

This is a long-awaited response to the issue of escalating ground rents.

The intention is that the changes will not be retrospective and landlords will not be required to reimburse leaseholders for ground rent paid in the years before the changes take effect.

What is forfeiture and what is changing?

Forfeiture allows a landlord to terminate a lease and repossess the property if the leaseholder breaches the lease, for example by failing to pay ground rent. It has historically been criticised as a disproportionate response to lease breaches, particularly where the amounts owed can be minor relative to the value of the property.

The aim is to remove this power and replace it with a new process that includes court oversight, reducing the risk of homes being lost as a result of leaseholder breaches.

What is commonhold and why now?

Commonhold is a form of ownership where the freehold of a building is owned by a commonhold association made up of all the flat owners. The association is responsible for the maintenance and management of the building’s common parts, giving flat owners a collective say in what works are carried out and how they’re delivered.

Although introduced by legislation in 2002, take-up of commonhold has been minimal to date. The government is now seeking to reinvigorate commonhold by making it the default tenure for new flats, alongside providing an easier conversion pathway for existing leasehold blocks.

The Bill proposes to ban the sale of new leasehold flats, subject to certain exceptions where circumstances require.

The government has also launched the “Moving to commonhold: banning leasehold for new flats” consultation. This seeks views on the scope and timing of the proposed ban, any narrow exemptions and the supporting measures needed to encourage adoption of commonhold. The consultation is due to close on 24 April 2026.

Summary

The proposed ground rent cap will be welcome news for leaseholders, giving them greater clarity around the costs associated with owning a leasehold property.

Landlords will need to assess their investment portfolios, as the value of their freeholds is likely to be affected by these changes.

The proposed abolition of forfeiture proceedings will also provide greater security for leaseholders, who will no longer face the potential loss of their homes for relatively minor lease breaches.

The shift towards commonhold as the default tenure for shared buildings represents a major change. Its long-term impact will become clearer following the consultation period and further government announcements in the months and years ahead. This reform will affect not only homeowners, but also investors and developers involved in delivering new homes.