Leasehold Reform Latest News: What Property Owners Need to Know in 2026
With the government proposing commonhold to become the default tenure for new-build flats, replacing the
May 14, 2026
On 27 January 2026, the Ministry of Housing, Communities and Local Government published the draft Commonhold and Leasehold Reform Bill. If it passes close to its current form, it’ll fundamentally change how property ownership works in England and Wales.
Housing Minister Matthew Pennycook has been open about the scale of the problem. Rising ground rents, expensive service charges, and shrinking lease terms continue to affect five million leasehold homes across England and Wales.
So, what’s actually changing?
Key Takeaways
The big headline is that the government wants commonhold to become the default tenure for new-build flats, replacing the traditional leasehold model.
And while that longer-term transition takes shape, ministers are also pushing through a series of changes aimed at giving existing leaseholders stronger rights and better protection right now.
Some reforms are already here. One of the most vital is the scrapping of the old two-year ownership rule. In the past, you had to own your property for at least two years before you could extend your lease or buy the freehold.
That wait period is gone. Technically, buyers can now secure their property’s value from day one of ownership. In practice, however, your Land Registry application needs to be processed before a formal notice can be served.
The rules around Right to Manage have also been relaxed. Previously, leaseholders in mixed-use buildings were often locked out of management control if more than 25% of the building was used for commercial purposes.
That threshold has been doubled to 50%. This brings many more high-street-style apartments into the fold and allows more leaseholders to take control of how their buildings are run.
Even better, leaseholders are no longer automatically responsible for paying the freeholder’s legal costs during certain claims.
Did you know that commonhold has existed in England and Wales since 2002? Yet, barely 20 developments have ever actually used it. That could soon start to change.
Under commonhold, buyers own their flats outright and indefinitely. Instead of a freeholder sitting above the property, the building is owned and run by a commonhold association made up of the flat owners themselves. You can still hire a managing agent, but they answer to you.
Historically blocked by the need for unanimous consent, commonhold conversion is becoming more achievable now that the requirement has dropped to a 50% majority.
Perhaps the biggest change, however, is the proposed ban on leaseholds for newly built flats. If this goes through, commonhold becomes the default way people own their homes.
The government estimates that around 770,000 to 900,000 leaseholders currently pay over £250 per year in ground rent, of which 490,000 to 590,000 are in London and the South East. In 2025 alone, leaseholders paid out over £600 million in ground rent.
That’s an extraordinary sum of money flowing from homeowners to freeholders every year. The proposed cap puts a plug in that drain. Existing ground rents would be capped at £250 a year before tapering to £0 after 40 years. That’s potentially £4,000+ in savings over the life of a lease.
More importantly, this would offer relief for those trapped in properties with expensive or escalating ground rents. The reforms would also remove the severe threat of forfeiture, under which leaseholders can technically lose their homes for unpaid charges as little as £350.
While savings are on the horizon, the cap isn’t expected to take effect until late 2028, subject to parliamentary approval. For now, existing lease terms and payment obligations still apply.
This has been a major frustration for leaseholders for years. Many flat owners have little idea how their charges are calculated or whether what they’re paying is actually fair.
The government has been reviewing reforms that would standardise service charge information and create clearer breakdowns of spending and management fees.
For responsible property investors and homeowners, greater transparency would be welcome. Better information makes for better decisions. It also creates stronger accountability for managing agents and freeholders.
The answer depends on the property. Flats with short leases could get a boost if future reforms make extensions cheaper, specifically by removing the marriage value, which requires you to pay 50% of the profit to your freeholder.
On the other hand, the uncertainty has slowed parts of the market. Some investors are sitting tight while the details are still being thrashed out, amid concerns that new rules capping ground rent income could impact freehold investments.
There is, though, a quiet optimism starting to build. Many in the industry believe a cleaner, fairer system would make flat ownership more attractive and bring buyers back to the market.
All that said, lease length still drives value and mortgageability. Properties creeping toward the critical 80-year lease threshold can get harder to sell or refinance. Plus, extending gets a lot more expensive once you cross that line.
So, should you wait for future reforms before doing anything? The reforms, positive as they are, won’t happen overnight. The sensible move is to seek proper professional advice now, rather than hope the legislation sorts everything out in time.
Some leasehold reforms are already on the statute book. Other parts are still working their way through consultations and draft legislation.
Will there be delays? Almost certainly. There’ll be adjustments, pushback, and compromises along the way. But the direction of travel is no longer in doubt.
The government has made its position clear: more protection for consumers, fairer service charges, greater control for homeowners, and a shift toward commonhold as the standard way of owning a flat in this country.
The UK property market is changing quickly. Interest rates, affordability pressures, and leasehold reform are all shaping investor decisions at the same time.
That creates opportunity, but it also creates confusion. Many buyers still do not fully understand the difference between leasehold and commonhold ownership.
The changes are already underway. The best time to get informed is right now. Register here and start making sense of the UK property market today.
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