What the Commonhold and Leasehold Reform Bill Could Mean for Homeowners
At the Battle of Hastings in 1066, William the Conqueror defeated Harold Godwinson and installed himself as King of England. In doing so, he claimed ownership of most of the land for the Crown, granting estates to his nobles, who in turn leased land and property to sub-tenants.
Thus, the feudal system of land ownership was born.
Nearly a thousand years later, the principles established in the aftermath of 1066 still underpin how land and property are held in England and Wales. Today, England and Wales are among the last developed countries still operating a system rooted in this feudal framework. Unsurprisingly, a model designed for medieval society is increasingly struggling to deliver fair and equitable outcomes in the modern world.
A system facing inevitable change
On 27 January 2026, the government published draft legislation, the Commonhold and Leasehold Reform Bill, which could fundamentally change how flats (and many houses) are owned in England and Wales.
If passed, the Bill would begin the process of dismantling the traditional leasehold system, replacing it with commonhold as the default form of ownership for new flats, while also creating a clearer and more realistic route for existing leaseholders to convert.
Why leasehold is under reform
Under the current leasehold system, flat owners do not own their homes outright. Instead, they hold a long lease, typically between 99 and 999 years, while the freeholder retains ultimate ownership of the building and the land beneath it.
This structure commonly involves:
- Ground rent payments
- Service charges set by a third-party landlord
- Fees for consents and alterations
- The risk of forfeiture if the lease is breached
When a lease expires, ownership of the property reverts to the freeholder. While leaseholders can usually extend their lease, doing so often means effectively buying back the property. Many owners only discover the true cost when remortgaging or selling, sometimes facing unexpected bills running into tens of thousands of pounds.
A “complete reset” of ownership
Professor Nick Hopkins, who led the Law Commission’s work on leasehold reform, has described the Bill as “a complete reset of what it means to be an owner, particularly of a flat.”
Recent headlines have focused on the proposed £250 cap on annual ground rent, but the more far-reaching change lies elsewhere: enabling existing leaseholders to move away from leasehold ownership altogether.
What is commonhold?
Commonhold is already widely used in other countries, including the United States (condominiums) and Australia (strata title). Under commonhold:
- You own your flat outright, with no time limit
- You jointly own and manage the building’s common parts with other owners
- There is no external freeholder
- There is no ground rent and no reversion of the property
Although commonhold has existed in English law since 2002, it has seen very limited uptake, largely because converting from leasehold has been practically impossible.
How conversion could work under the new Bill
At present, switching from leasehold to commonhold requires unanimous consent from:
- The freeholder
- All leaseholders
- All mortgage lenders
In practice, this has meant conversions almost never happen.
Under the draft Bill:
- Only 50% of leaseholders in a building would need to agree
- Leaseholders would collectively buy out the freeholder’s interest
- The price would be calculated using a statutory formula
Importantly, proposed limits on ground rent, reducing it over time to a nominal “peppercorn”, could significantly reduce the cost of buying out the freehold in many buildings.
Changes to forfeiture and enforcement
Another major reform proposed in the Bill is the removal of forfeiture as it currently operates.
Forfeiture allows a freeholder to take back a property entirely for certain breaches of lease, potentially leaving the leaseholder with nothing, even where the debt involved is relatively small, and creating a substantial windfall for the freeholder.
The Bill proposes replacing this with proportionate enforcement, overseen by the courts, bringing leasehold disputes more in line with modern principles of fairness and balance.
Who may not benefit
Not all buildings will be able to convert. More complex developments — particularly those with mixed residential and commercial elements — may fall outside the scope of the reforms, at least initially.
Further detail is expected as the Bill progresses through Parliament.
What happens next?
This is draft legislation, not yet law. It will be debated, amended and scrutinised before any final version is enacted. Timescales and details will almost certainly change.
Nevertheless, the direction of travel is clear: towards simpler, fairer and more transparent ownership for flat owners.
What this means for buyers and sellers
For homeowners, buyers and investors, these reforms could:
- Improve long-term property security
- Reduce exposure to escalating costs
- Increase mortgage confidence in flats
- Enhance the attractiveness of commonhold properties
We will continue to monitor the progress of the Bill and will share further commentary on how it may affect valuations, sales, purchases and long-term ownership decisions.
If you are selling, buying, or currently own a leasehold property and would like some tailored advice about how this might affect you, please get in touch with our team on 01243 861344. We will be delighted to help.