An Overview of The Draft Commonhold and Leasehold Reform Bill

An Overview of The Draft Commonhold and Leasehold Reform Bill 19 February 2026

Published on 27th January 2026, the Draft Commonhold and Leasehold Reform Bill aims to “modernise, strengthen and reinvigorate the commonhold and leasehold framework.”

Our members have analysed the Bill and written a series of explainers summarising the key proposed changes and what they could mean in practice.

Reinvigorating Commonhold, written by Daniel Black
Leasehold: A Residential Revolution, written by Oliver Radley-Gardner KC
A Cap on Ground Rents, written by Guy Fetherstonhaugh KC
Abolition of Forfeiture, written by Catherine Taskis KC
Changes to the Rentcharge Regime, written by Edward Blakeney

Reinvigorating Commonhold

What is it not?

Well, it is not the grant of the right to the exclusive possession of land for a determinate term (less than the grantor's remaining one in the land) for rent.

What is it?

A different way of allocating ownership of multiple units of land.

How does it work?

Think of it as the collective ownership of a number of freehold units in a particular building.

Your 'commonholder' owns their own unit outright. That is, they do so outright with no term limitation. This is paired with shared ownership of common areas via a 'commonhold association' - a company with each 'commonholder' as a member, held under joint control.

Is there Government guidance on how that works?

Of the operation of commonhold associations, the Guide to the "Draft Commonhold and Leasehold Reform Bill" ("the Guidance") states: "the general rule is that the unit owner will be the member and where there are joint owners, they are both entitled to be the member. Where joint unit owners are both members, there won't be additional votes attached to that unit. Regulations will set out how that unit's voting rights should be exercised."

What is the Government trying to achieve?

The Guidance states: "Commonhold is a form of freehold ownership. Freehold ownership lasts forever and gives fairly extensive control of the property. Within a commonhold, individual property owners can own their home outright with no expiring term. Like in leasehold, these individual properties could be flats, shops, or offices (we call them "units" for short).

Pair that with the abolition of forfeiture for long residential leases, and a proposed ban on certain new residential leases and, it is fair to say, it is trying to achieve a striking change to how residential land is held.

Will it become law?

Whatever else it has failed to do, this Government has got form in getting major housing legislation through this Parliament. Keep a watching brief!

Leasehold: A Residential Revolution

Headlines:

No new leases should be granted of flats over 21 years after CLRB comes into force
Flats granted in breach are liable to be converted into commonholds free of charge
This is backed up by financial penalties and enforcement

The Ban

Part 2 of the CLRB regulates long leases of residential flats.
Clause 109(1) of CLRB bans the grant of new long leases of flats (exceeding 21 years) after the Clause is in force.
Clause 109(2) prevents the assignment of long leases that become long residential leases of flats but were not such leases when they were granted.
Both provisions relate to a “relevant building” only (see below).
The “ban” does not affect the legal validity of a transaction in breach of those Clauses 109(3). This is because the grantee of a “banned” lease is then given:
- the right to acquire a commonhold unit, where the lease is of a flat on commonhold land (Clause 122)
- a right to conversion, entitling the grantee to have the land converted to commonhold and then to acquire a commonhold of the flat (Clause 123);
- and a right to rectify a lease that is non-compliant with the requirements as to Land Registration under Clause 119 (see below).
When the lease dies, so does the right of redress: Clause 125, and the right of redress cannot be detached from the lease itself (Clause 126(3)).
Further provisions on anti-avoidance of redress rights are contained in Clause 126.

What Counts as a “Long Residential Lease"?

It must be long: meaning over 21 years in length (Clause 111), or a series over 21 years in length (Clause 112).
It must be “relevant”: Clause 115(3), which means “long and registered”.
It must be residential: Clause 113 says this means that is must be of a flat and the lease does not stop the flat from being occupied as a separate dwelling.
It must be of a flat: Clause 114 – it must be part of a building, constructed or adapted as a dwelling, wholly or materially above or below another “part of the building” (defined in Clause 115(4)).
It must be of a flat in a “relevant building” , which Clause 115(1) – (2) says is one on commonhold land, or one that where the building was finished on or after the coming into force of Clause 109, or, if it was built before then, if the building was wholly unlet on a relevant lease. The effect of this is that buildings let on leases by the date of the coming into force are not affected by CLRB.

“Permitted” Leases

Some long leases are still allowed. These are “permitted leases”: Clause 116.
They are provided for in Schedule 2 (if on commonhold land) and Schedule 8 (if not on commonhold land).
Schedule 2 covers (i) shared ownership leases, and (ii) home finance plan leases.
Schedule 8 is presently blank. That is intentional as that is a separate consultation at the moment: see Explanatory Notes, para 1023. Such leases will need to comply with Part 2 of the CLRB.
Permitted leases are regulated by marketing restrictions (Clause 117) and transaction warning conditions (Clause 118) about the lease to be granted.

Sundry Provisions

New Land Registration requirements: Clauses 119 – 120.
A failure to meet the Clause 119 requirement confers a right of rectification (Clause 124).
There is a power to amend definitions by secondary legislation (Clause 134).

Enforcement

Trading standards enforce the above scheme (Clause 127).
The whole scheme overseen by a “lead enforcement authority” (Clauses 130-133), in the first instance the Secretary of State. Financial penalties are provided for in Clauses 128- 129.

A Cap on Ground Rents

Section 136 of the Commonhold and Leasehold Reform Bill currently before Parliament, together with a fair amount of baggage in Schedule 13, has as its centrepiece a proposal to introduce a cap on ground rents of £250 a year, changing to a peppercorn after 40 years. This is intended to apply to most long residential leases not already covered by existing legislation.

This provision is seen by the government as striking a balance between the abolitionists – that substantial and vocal group of activists who abhor ground rents as a mediaeval and unfair constraint on leaseholders who have to pay an annual charge without receiving any service in return; and those who see ground rents as part of the financial package that is paid for the grant of a long lease, who argue that if ground rents are abolished, the premium will have to increase by a commensurate amount.

In the Policy Statement accompanying the Bill, the government announces that their approach: “… has been designed to strike a fair balance between the interests of different groups and maintain the UK’s reputation as a safe place for investment.”

The pension funds and other investors who hold vast ground rent portfolios will not agree with this statement. Unfortunately, the impact assessment and response to a previous ground rent consultation paper which might have shed some light upon this area have not yet been published; the Paper says that this will happen “in due course”.

There is of course a lot of history behind this proposal.

The story starts with concerns expressed by the Competition and Markets Authority about initially high and escalating ground rents, which create problems in selling or mortgaging a property. On the other side of the coin are those (often pension funds) holding ground rent income streams as investments. In 2019, the late and great Catherine Callaghan KC was instructed by the Law Commission to provide an independent opinion on the compatibility of the various options for reform with the ECHR. She reported that if premiums payable to landlords in return for controls on ground rents were to be significantly reduced, this would amount to an expropriation of assets and would be open to legal challenges, undermining the UK’s reputation as a place to invest.

Despite this, The Leasehold Reform (Ground Rent) Act 2022 abolished ground rents for new leases. Before that had bedded in, the government (here meaning the last Conservative government) published a substantial Leasehold and Freehold Reform Bill, which proposed dramatic changes to the law of enfranchisement, and less dramatic changes to service charges.

Shortly before that Bill was published, on 9 November 2023 the government published a consultation document ‘Modern leasehold: restricting ground rents for existing leases’ which set out proposals to extend the existing restrictions on the ground rents that residential tenants could be charged, to include ground rents payable by existing residential tenants. The consultation document set out 5 options for existing ground rents:

Cap ground rent at a peppercorn.
Set a maximum financial value for ground rent.
Cap ground rent at a percentage of the property value.
Limit ground rent to the original value when the lease was granted.
Freeze ground rents at current levels.

In the second reading debate into what was to become the Leasehold and Freehold Reform Act 2024, Michael Gove, the then Secretary of State for Levelling Up, Housing and Communities, said he favoured the first option but “Of course, if compelling evidence is produced, as a Secretary of State with great civil servants, I will look at it, but my preference is clear, and I suspect that it is the preference of the House as well.”

On 6 December 2023, the Department published an impact assessment, which said that the value of the ground rents that would be converted to a peppercorn under the first option would be £27.3 billion. The paper recognised that this transfer of value from freeholder to leaseholder would in effect be a free gift: “We also expect that capping all ground rents will lead to an increase in asset value for all leases”). There was no attempt to rationalise why pension funds should be deprived in order to benefit leaseholders in this way. After all, many of those same leaseholders might be expected to draw their pensions from those depleted funds.

The new Act carries through these proposed reforms, but without any attempt to grapple with the issues raised by the 2023 impact assessment and the responses to it. We can expect that process to take place as the Bill winds its way through Parliament. The government may have been emboldened by the recent rejection by the Courts of the early attempts to challenge the 2024 legislation – see R. (on the application of John Lyon's Charity) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 543 (Admin); R. (on the application of ARC TIME Freehold Income Authorised Fund) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 (Admin). In these cases, the government’s proposal was not to abolish ground rents, but rather to cap them at 0.1% of the freehold value. The proposals in the 2026 Bill go significantly further than this. We can expect many more such challenges as the Bill continues on its way.

Abolition of Forfeiture

Tucked away in Part 4 of the Bill are various provisions expressed to relate to enforcement of long residential leases. The effect of these will be to abolish forfeiture – decried as “a long criticised and disproportionate remedy that allows landlords to terminate leases and repossess homes” – and to replace it with “a fairer, more proportionate” enforcement regime. This is stated to ensure that landlords can still address breaches of lease covenants but with judicial oversight and without automatic loss of the leaseholder’s home; giving courts the power “to grant remedies that are fair and proportionate to the breach and introducing safeguards that make enforcement transparent, reasonable and just”.

Some key points to note.

The provisions apply to long leases of residential property, both existing leases and those granted after the legislation comes into force; and will enable landlords to enforce breaches that occur after the legislation takes effect. The reforms apply to long residential leases only: forfeiture will continue to operate for commercial and agricultural leases (although the guidance published with the Bill says that the government and the Law Commission are continuing to explore options for reform in those sectors).
Under the new lease enforcement scheme, landlord will no longer be able to end a lease unilaterally. In the event of a breach, they must comply with a number of statutory conditions – designed to protect leaseholders – before they can apply to the court for a remedy. These conditions include two which require notice to be given to a tenant: an initial warning notice (an “explanatory statement”) that if a breach occurs, a lease enforcement claim may be made, and further notice immediately prior to a claim, when all statutory conditions are met. In between, the landlord is required to obtain a final determination that a breach has occurred: a requirement equivalent to that presently imposed on landlords (prior to service of a s.146 notice) by s.168 of the Commonhold and Leasehold Reform Act 2002, which will be removed by the new Act.
Certain breaches are excluded from the scheme of lease enforcement claims entirely, including ground rent arrears and other non-payment breaches below a specified threshold (to be between £500 and £5,000, and set out in regulations following consultation). For these breaches, landlords cannot use forfeiture but can continue to use existing debt recovery processes.
On a lease enforcement claim, the court can make any order that it considers to be appropriate and proportionate in the circumstances: but may not make an order to terminate the lease. Factors which the court must take into account include the conduct of the parties, the nature and seriousness of the breach, and the extent to which the breach has been or can be remedied. Possible orders include requiring the tenant to remedy the breach; or (in limited circumstances) an order for sale of the property, with protections to ensure the tenant is compensated for any remaining equity after charges, any sums due to the landlord, and costs have been accounted for.

At first glance, and save for the fact that the court will no longer have power to make an order terminating the lease, it seems likely that the new scheme for residential long leases will operate in relation to breach of tenant’s covenants much as does the existing legislation. But the path to enactment is a long one, so there will undoubtedly be more to come.

Changes to the Rentcharge Regime

Part 5 of the draft Commonhold and Leasehold Reform Bill (“the Bill”) addresses estate rentcharges, and in particular the regulation of remedies for arrears of estate rentcharges. Although it is relatively unassuming, featuring only one section (s.156), the ramifications are significant. So what are rentcharges, and what does the Bill propose to do about them?

What are rentcharges?

A rentcharge, as defined by s.1 of the Rentcharges Act 1977 (“RA 1977”), is “any annual or periodic sum charged on or issuing out of land, except (a) rent reserved by a lease or tenancy, or (b) any sum payable by way of interest.” They invariably concern freehold land, with the freehold proprietor paying the sum to a third party (who typically has no other interest in the land). Subject to a few exceptions, it has not been possible to create new rentcharges since the RA 1977 came into force i.e. 22 August 1977 – see ss.2(1) and 18(2) of the RA 1977. And pursuant to s.3 of the RA 1977, many pre-existing rentcharges will be extinguished by 22 August 2037. The primary exception to s.2(1) and s.3 of the RA 1977, at least for present purposes, is that concerning estate rentcharges – see ss.2(3)(c), 2(4)-(5) and 3(3) of the RA 1977. These can be encountered on managed estates, and are used to make covenants enforceable against successors in title and to recover reasonable costs for communal services, maintenance/ repairs, insurance etc (akin to service charges).

Current enforcement measures

As with any sum of money due from one party to another, there are a range of standard enforcement measures – debt claims, for example. However, ss.120A-122A of the Law of Property Act 1925 (“LPA 1925”) provide additional powerful enforcement options for the holder of a rentcharge. So, where applicable, s.121(3) of the LPA 1925 permits the person entitled to the annual sum under the rentcharge to enter into possession of the land and take the income from the same until the arrears and costs are fully paid, and pursuant to s.121(4) the charge holder can grant leases of the charged land for the same purposes (and that lease subsists even after the arrears are cleared). Under ss.122(1)-(2) of the LPA 1925, receivers can also be appointed to assist in recovering the outstanding amounts.

What does the Bill do?

The Bill proposes radically to alter the position by repealing ss.121-122 of the LPA 1925, thereby abolishing those enforcement methods. As the explanatory notes to the Bill state, “Rentcharge owners will retain the ability to recover arrears through proportionate means, including through cost recovery clauses in the deeds of transfer, an action in the small claims court, a claim for a breach of covenant, or a statutory demand in bankruptcy.” The reasoning given for these changes is unambiguous: “This reform removes draconian and disproportionate remedies while ensuring that legitimate obligations remain enforceable.” It also reflects the greater focus on leaseholder protections in the Bill and other recent legislation, in particular the abolition of forfeiture as a way to enforce long residential leases (per Part 4 of the Bill), and ensures that freehold property owners are not overlooked. Whether estate rentcharges are encountered more frequently with the rise of commonhold/ banning of long leases (per Parts 1 and 2 of the Bill) is still to be seen. The Bill also introduces a new s.120AA into the 1925 Act, which imposes new notice requirements before arrears of estate rentcharges can be enforced. Further, the Bill makes clear that Crown land is only affected insofar as the rentcharge is held by a government department or on behalf of the King for the purposes of a government department.

What about LAFRA?

It may be recalled that s.113 of the Leasehold and Freehold Reform Act 2024 (“LAFRA”) addressed rentcharges by amending ss.120A-122A of the LPA 1925, adding a number of new protections for those paying rentcharges. The Bill goes several steps further – as well as introducing additional notice requirements, the Bill abolishes certain enforcement methods rather than just disapplying them for certain rentcharges (not estate rentcharges) after 27 November 2023. Sections are also updated to reflect the new terminology used by the Bill. So, whilst the reforms introduced by LAFRA are by no means redundant, the government is (somewhat tellingly) already proposing to change them quite substantially.

When?

Part 5 of the Bill is to come into force two months after the Act is passed, and it is currently one of only a few parts of the Bill with a fixed commencement date – see s.163 of the Bill. As such, depending on when it becomes law, these provisions will take effect quickly and there will be no need to await further regulations or statutory instruments. The Bill therefore proposes a swift and significant change in the law.

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