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The journey since 2024
Labour's 2024 General Election manifesto pledged to end the "feudal" leasehold system and promote commonhold as the default tenure by banning new leasehold flats.
Since taking office, the Government has continued to advance commonhold reform. The March 2025 Commonhold White Paper (the White Paper)1 set out a revised framework for delivering commonhold that rectifies the flaws of the Commonhold and Leasehold Reform Act 2002. See our articles: Commonhold: the revival; and Reforms to leasehold home ownership announced: commonhold for our previous commentary. The Government subsequently published the draft Commonhold and Leasehold Reform Bill (the Draft Bill) in January 2026.
The Draft Bill has completed its pre-legislative scrutiny by the Housing, Communities and Local Government Committee (the Committee). The Committee published its final report on the 27 May 20262 concluding that the Draft Bill represents a “significant step” towards replacing leasehold with commonhold, but that the final bill requires several changes and additions to meet leaseholders’ expectations and previous government pledges”3.
The Government was expected to provide its initial response within two months (i.e. by 27 July 2026). However, the Housing Minister wrote to the Committee on the 10 July 2026, confirming that the Government will be unable to issue a response before that deadline “…as a result of the announcement made by the Prime Minister on 22 June that he was resigning as Prime Minister…and the associated constraints on government business in the period ahead of the summer recess”. The Housing Minister expressed his "sincere hope" that a substantive response will be provided soon after the House returns from the summer recess, with a substantive Bill introduced to Parliament soon after, but acknowledged that the precise date will be "a decision for the new administration"4.
In this article, we consider many of the recommendations put forward by the Committee, including proposed reforms to the Leasehold and Freehold Reform Act 2024 (LAFRA), the recommended timeline for implementation and other factors which may delay implementation of the Government’s aims.
What does the Draft Bill propose?
The Draft Bill seeks to achieve four main aims:
- introduce a revised commonhold framework to make commonhold the default tenure. This will include a ban on new leasehold flats, an enfranchisement process to facilitate conversion to commonhold where at least 50% of qualifying leaseholders agree, and reforms to apply commonhold to mixed-use buildings;
- cap ground rent at £250 per year, reducing to zero after a 40-year transitional period. This will bring existing leases in line with the ban on ground rent in new leases introduced by the Leasehold Reform (Ground Rent) Act 2022 (see our previous article: Ground rent reform: consultation and comment);
- abolish forfeiture and replace it with a fairer system; and
- address private estate charges.
Reform the “reform”? The Committee recommendations
The Committee’s report highlights a number of concerns about the proposed commonhold framework – with key identified issues summarised below. Although the report and its recommendations may prove significant, we await the Government’s response (which is now delayed), to see whether or not the Committee’s recommendations will be included in the final bill.
1. Ground rent cap
To date, public attention has focused on the provisions dealing with the cap on ground rents. A cap will clearly benefit leaseholders liable to pay increasing ground rents, however there are concerns that a cap poses a significant risk for those institutions and pensions funds invested in the ground rent market. For example, Ground Rents Income Fund has recently reported a 42.3% fall in the value of its portfolio over the first half of its financial year, “…with the decline driven primarily by the [Draft Bill]”5.
The Government has previously reported that “ground rents represent, at most, a small percentage of total UK pension assets”6. The Committee agree and support the Government’s policy to tackle unaffordable ground rent charges and are supportive of the Government’s cap of £250.
However, the length of the 40-year transitional period (before the ground rent cap changes to a peppercorn) is of concern to the Committee. The Committee concluded that "it is not clear to us why the Government has decided that a 40-year transitional period before a change to peppercorn is the most justified and fair policy"7 and called on the Government to publish further evidence to justify why it has proposed a 40-year rather than a 20-year transition.
The Committee has also called for the £250 cap to come into force two months after Royal Assent is given, rather than at a “time to be decided by ministers” as currently provided in the Draft Bill.
2. Strengthening leaseholders’ rights
a. Collective enfranchisement premium – Development Value
Under the Draft Bill, existing leases will need to undergo collective enfranchisement before converting to commonhold. Provisions in the Draft Bill to cap ground rent at £250 per annum will make enfranchisement cheaper for tenants.
However, neither the Draft Bill nor LAFRA implement the Law Commission’s recommendations regarding development value. Development value represents part of the premium which leaseholders must pay to their landlord when buying the freehold interest in a block of flats. The Housing Minister has recognised that development value “can make the cost of buying a freehold prohibitively high”8. The Committee recommend that the Government must enact measures to ensure leaseholders can avoid paying development value upfront. This will be important to ensure that converting to commonhold is not prohibitively expensive.
As an alternative, the Law Commission suggested that leaseholders could grant a restriction on future development in favour of the former landlord, instead of paying the development value upfront, and would then pay a premium to release the restriction at a later date. This recommendation is not reflected in the Draft Bill.
b. Right to Manage (RTM)
The Law Commission has previously recommended that RTM claims be simplified to ensure that more leaseholders are able to appoint their own managing agent through the statutory process, where leaseholders may not be able to convert to commonhold. Claims are being frustrated due to delays in obtaining information and uncertainty as to how the process applies to estates shared with other buildings. The Draft Bill does not contain any provisions on RTM. The Committee has accordingly recommended that the Government must include such provisions in the final bill or in a separate RTM bill.
c. Regulation of property managing agents
The Committee found it a "significant shortcoming" that the Draft Bill does not include provisions to introduce regulation of property managing agents. The Committee recommended that managing agents (including retirement housing providers) must be regulated by an independent regulator with proper enforcement powers as “a necessary intervention to support all leaseholders, particularly those who are not able to benefit from conversion to commonhold” and because “managing agents will also continue to play a key role under the commonhold regime.”9
d. Private estate charges
The Draft Bill seeks to repeal enforcement remedies against homeowners who have unpaid private estate charges, which are seen to be unjust. Whilst the Committee are supportive of these provisions, they argue that the underlying problems with private estate charges still exists and that local authorities should adopt these amenities. They concluded that the long-term solution must be to put local government finances on a sustainable footing and require that developers deliver infrastructure to common standards to ensure local authorities can adopt essential amenities on developments in future.
3. Commonhold reform
To ensure that the final bill achieves the Government’s policy aims, the Committee made a number of recommendations, some of which are summarised below:
- Streamlining the conversion process: the Committee recommended that conversion to commonhold should be the default outcome of a collective enfranchisement, removing the two-step process of acquiring the freehold through collective enfranchisement and then converting. The aim is to remove an additional layer of bureaucracy which may present a potential barrier to converting to commonhold. The Committee also question whether the “share of freehold” model should remain in common use.
- Non-consenting leaseholders: leaseholders may delay converting if this means they avoid having to pay for the costs of purchasing the common areas (following conversion by the consenting leaseholders). The Committee recommend that the Government must design a mechanism for non-consenting leaseholders to contribute towards the shared costs of collective enfranchisement if they choose to join at a later date.
- Building safety: the Committee proposed that freeholders disclose information regarding building safety defects as part of the enfranchisement process to ensure that leaseholders are fully informed of any liabilities they will take on when converting to commonhold. However, this may have the unintended consequence of disincentivising leaseholders from converting to commonhold as they will lose the benefit of the leaseholders’ protections under the Building Safety Act 2022.
- HM Land Registry: modernising HM Land Registry's systems will be key to successful implementation of commonhold. The Committee recommendations include government investment in digitising HM Land Registry’s systems to ensure its prepared for an increase in commonhold applications.
4. Ban on new leasehold flats
The “sunset clause” (being the ban on the sale of new leasehold flats) is key to the Government’s revision to the commonhold framework. Philip Rainey KC, of Tanfield Chambers said that “unless there is a sunset clause [on leasehold flats], it is unlikely you will get a high degree of take-up”.10 How these reforms will impact current developments in practice, is a key concern.
The Committee’s report did not focus on the details of how the ban will operate since the procedural aspects remain subject to consultation outcome. The Government’s consultation, “Moving to commonhold: banning leasehold for new flats” sought views on "scope, exemptions, timings, [and] transitional arrangements"11. That consultation has closed and the Government’s response is awaited.
However, the Committee’s report did consider the operation of the proposed ban in relation to the retirement housing sector and social housing.
- Retirement Housing Sector: the consultation acknowledged the discussions concerning retirement housing and that, due to the requirement to control the specialist services provided, there are arguments for the retirement housing sector to fall outside of scope. Whilst the care model and complex financing of some retirement housing (particularly Integrated Retirement Communities) may justify a different approach, the Committee heard evidence that homeowners in retirement housing are "still exposed to some of the worst features of leasehold". The Committee recommended that any exemptions for the retirement housing sector must be "strictly limited"12.
- Social housing: under new leadership of the Labour Party, there is likely to be an increased push for social housing. It is not yet clear how social housing will successfully operate in a commonhold structure (provisions will need to be included in the final bill), where a social housing provider needs to comply with the Regulator of Social Housing but also within the confines of the commonhold association.
When should we expect the final bill to become law?
At the time of writing, the final bill has not yet been formally introduced to Parliament nor begun its passage through either the House of Commons or the House of Lords. The Committee has recommended that the Government provide its initial response to the report's recommendations within two months, introduce the final bill to Parliament in Autumn 2026, schedule the second reading before the November recess and ensure the final bill receives Royal Assent in mid-202713.
In light of the Government’s announcement that the response to the Committee’s report will be delayed, the Committee’s recommended timelines appear increasingly ambitious.
The Housing Minister has indicated the aim is to pass the final bill within this Parliament14 (i.e. by mid-August 2029 at the latest) and to “bring the leasehold system to an end in just five [years].” This is an ambitious strategy considering that it took 29 years to put the modern leasehold system in place.
These ambitious timelines may be further challenged, given that the final bill is likely to be substantial at around 260 clauses and 20 schedules15 (the Draft Bill currently runs to 164 clauses and 14 schedules).
As highlighted below, there are a number of factors which may delay the progress of the final bill and therefore impact upon these timelines.
The Government has indicated when specific measures may come into effect16:
- Measures to abolish forfeiture will commence as soon as possible following Royal Assent.
- Measures to remove the remedies for enforcing rent charges to take effect shortly after Royal Assent.
- The Government anticipates that the cap on ground rents will take effect at some point in 2028. However, the Committee believes this could come into force in late 2027 and there have been recent indications that the Government may implement this compressed timeline.17
- The reformed commonhold model will be available for use before the end of this Parliament (2029).
The Housing Minister has indicated that the ban on new leasehold flats is "highly unlikely" to come into force until after the next general election18 commenting that he thought it “highly likely that we don’t switch on the ban in this parliament.” He also told reporters that “it’s really complex, and so what we really want to do on all of these fronts is have all the primary legislation that we need to end leasehold in place… but switching on the ban involves some really quite complex trade-offs with housing supply.”19
What might delay the passage of the final bill?
Several factors (in addition the Government’s delayed response to the Committee’s report), could slow the final bill's journey onto the statute book.
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Firstly, the Government has acknowledged that LAFRA "contains a small number of specific flaws" which it intends to rectify through the substantive Commonhold and Leasehold Reform Bill20, as set out in a policy paper published alongside the King’s Speech in May 202621. The Housing Minister has also indicated that enacting the remaining Law Commission recommendations on enfranchisement and RTM will likely require repealing aspects of LAFRA.
The Government has now published its response to its consultation “Strengthening leaseholder protections over charges and services”22. As anticipated, the Government have confirmed that they will implement measures under Part 4 of LAFRA via a minimum of five statutory instruments to be laid in Parliament later in 2026, with changes anticipated to take effect during 2027.
In addition, the Government has also launched two consultations on enfranchisement reforms23. The first seeks views on prescribing the deferment and capitalisation rates used in leasehold enfranchisement calculations under the Standard Valuation Method set out in LAFRA. The second consultation seeks views on implementing exceptions to the rule under LAFRA that parties pay their own process costs in enfranchisement claims.
It is also expected that the Government may repeal existing provisions of LAFRA, which will likely require further consultation, and add further complexity to the legislative programme which will affect the sequencing and introduction of elements within the final bill.
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Secondly, and perhaps most significantly, there is an ongoing human rights challenge to LAFRA that has the potential to cause delay to the wider reform programme24.
In October 2025, the High Court dismissed a judicial review brought by six major freeholder groups who claimed that key provisions of LAFRA were incompatible with Article 1 of Protocol 1 of the European Convention on Human Rights. The Court found that the reforms, including the removal of marriage value and the ground rent cap, struck a fair balance between public interest objectives and landlords' property rights. However, the Court of Appeal has since granted permission to appeal on all grounds. The exact date of the appeal is not yet known but the Court of Appeal is aiming to hear it by 23 April 2027.
The appeal process could therefore take months and extend the uncertainty over the timetable for implementing LAFRA and, by extension, the ground rent cap and elements of the broader commonhold agenda. The Housing Minister addressed this challenge directly, stating that the Government "robustly defended the challenges brought to the 2024 Act in the High Court last year and we'll defend the appeal just as tenaciously"25.
The Committee has concluded that “it is likely that the ground rent provisions in the Draft Bill, if passed in their current form, would be subject to a legal challenge on the grounds that they breach freeholders’ property rights under Article 1 of the 1st Protocol to the European Convention on Human Rights (ECHR).”26 However, the Committee concluded that it "should push ahead with reasonable reforms to cap ground rents and fulfil its electoral mandate".
- And thirdly, even once the final bill begins its formal passage through Parliament, a piece of legislation of this scale and complexity which impacts fundamental property rights is likely to be subject to extensive parliamentary debate. The Draft Bill is described as "technical in nature, as it seeks to make fundamental reform to an already complex area of land law"27. Once introduced, a public bill committee will consider the final bill clause-by-clause.
Conclusion
The Draft Bill represents the most ambitious attempt to reform the leasehold system in a generation. The cross-party consensus identified by the Committee suggests the political will for leasehold reform is unlikely to diminish, even with a change in Labour leadership, with Andy Burnham succeeding Sir Keir Starmer as Prime Minister, reinforcing the trajectory of reform. Nevertheless, the delayed response to the Committee’s report is a reminder that the legislative timetable remains vulnerable to political events, and stakeholders are likely to need to wait until at least the autumn for clarity on the new administration’s plans.
The Government acknowledges that leasehold cannot be abolished overnight, however, the Government hopes the new commonhold framework will be available for use by the end of this Parliament. The key questions now are therefore not whether commonhold will become the default tenure, but when and how.
The extent to which the Committee's recommendations will be reflected in the final bill remains uncertain. Whilst cross-party support for reform suggests broad alignment, recommendations that carry significant costs, risk delays, or conflict with central policy objectives are likely to be rejected or deferred to future legislative sessions.
The scale of the undertaking should not be underestimated. Beyond the final bill itself, an extensive legislative programme, including amendments to LAFRA, will be needed to support the transition to commonhold.
Developers, lenders, insurers and managing agents will need to adapt their systems and operations to a fundamentally different tenure model. As the Government acknowledged in the White Paper, "…for commonhold to take off at scale we need three things; we need developers to have the confidence to designate development as commonhold in place of leasehold, we need consumers to have the confidence to buy commonhold and we need lenders to have the confidence to lend on commonholds”28. All eyes will be on the Government’s response to the consultation on moving to commonhold, in particular, how the ban on leasehold flats will operate.
All across the property sector should be engaging now to understand the practical implications for their businesses. We will continue to monitor developments and would be happy to discuss any of the issues raised in this article.
Footnotes
2 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
3 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
4 https://committees.parliament.uk/publications/54202/documents/301599/default/
5 Ground Rents Income Fund sees portfolio value halve | Estates Gazette
6 Written questions and answers - Written questions, answers and statements - UK Parliament
7 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
9 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
10 Oral evidence - 10 Mar 2026
11 Moving to commonhold: banning leasehold for new flats - GOV.UK
12 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
13 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
14 Housing Minister speech on Leasehold and Commonhold Reform - GOV.UK
15 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
17 The Times, Keir Starmer to cap ground rent early after pressure from MPs, 7 June 2026.
18 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
20 Housing Minister speech on Leasehold and Commonhold Reform - GOV.UK
21 King's Speech 2026: background briefing notes - GOV.UK
22 Strengthening leaseholder protections over charges and services: consultation - GOV.UK
23 Leasehold enfranchisement valuation rates - GOV.UK and Leasehold enfranchisement process costs - GOV.UK
24 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
25 Housing Minister speech on Leasehold and Commonhold Reform - GOV.UK
26 https://committees.parliament.uk/publications/53249/documents/297864/default/
27 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
28 Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill
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