## Introduction to the Draft Reform Bill

The government has introduced the Draft Commonhold and Leasehold Reform Bill, signalling significant changes to leasehold and commonhold law in England. Although still subject to consultation until late April, the Bill outlines plans to make commonhold the default tenure for new flats, cap ground rents on older leases, abolish forfeiture for long residential leases, and ease the conversion of existing blocks to commonhold. These reforms aim to rectify the imbalance in leasehold arrangements and improve protections for leaseholders, but they also carry practical and legal complexities that landlords and agents should carefully consider.

## Ground Rent Cap: Relief and Consequences

One of the Bill’s headline measures is the introduction of a ground rent cap set at £250 per year for 40 years, followed by a peppercorn rent. This is designed to tackle the so-called ground rent scandal, particularly where escalating clauses have rendered leases unmortgageable. For many leaseholders, this will provide much-needed relief and greater confidence for mortgage lenders.

However, the cap raises concerns for leaseholders who have already purchased their freehold interests. Many paid premiums reflecting the capitalised value of ground rents exceeding £250 or subject to escalation. By capping or removing this income stream, these freeholders may find their assets devalued without compensation. Additionally, fairness issues arise where some leaseholders funded the freehold purchase while others did not, yet all benefit from reduced ground rents under the new rules.

Landlords should be aware that while the reform addresses historic abuses, it may negatively impact the value of freehold interests acquired under previous terms.

## Abolition of Forfeiture for Long Leases

The Bill proposes to abolish forfeiture for long residential leases, replacing it with a statutory enforcement regime that includes judicial oversight. This change aims to remove the “cliff edge” risk that has long complicated service charge disputes and breach allegations, providing a more balanced and predictable framework for resolving issues.

For landlords and managing agents, this reform could reduce the risk of sudden lease terminations and encourage dispute resolution through clearer legal processes.

## Making Commonhold Work for Modern Developments

Recognising the complexity of mixed-use developments, the Bill introduces “sections” and separate cost heads to better manage communal responsibilities. It also allows for “permitted leases” to accommodate shared ownership and certain financing arrangements.

This pragmatic approach moves away from earlier, more idealised versions of commonhold, making it more adaptable to the realities of contemporary property development. Landlords involved in mixed-use schemes should monitor these changes closely, as they may affect management structures and cost allocations.

## Lowering the Consent Threshold for Conversion

A significant reform is the reduction of the consent threshold for converting leasehold blocks to commonhold from 100% to 50%. The Bill also proposes mechanisms to include non-consenting leaseholders within a harmonised framework of rights and obligations.

This change could make commonhold conversion more achievable, potentially increasing its uptake beyond niche developments. However, conversion will still require freehold acquisition and may involve complex issues such as defective leases or fragmented ownership.

## Operational Challenges and Legal Risks

Several operational concerns remain. Firstly, the timing and transition arrangements are critical; a poorly managed shift could disrupt housing supply and lender confidence. Developers require tenure options that are fundable and saleable, while lenders and purchasers need clarity and enforceable rights.

Secondly, the sector’s limited experience with commonhold—fewer than 20 developments registered in over 20 years—means many professionals lack familiarity. Comprehensive training for solicitors, managing agents, valuers, and lenders is essential to ensure smooth implementation.

Thirdly, legal challenges are anticipated, particularly regarding the ground rent cap and sunset provisions, with potential Human Rights Act claims. Advisers should be prepared for litigation risks, especially where long-term income streams and valuations are affected.

## Key Considerations for Landlords

During the consultation and scrutiny phases, landlords should focus on:

– The development of regulations and guidance, including the Commonhold Community Statement and enforcement mechanisms.
– Safeguards within the lease enforcement scheme, such as thresholds and remedies.
– Fair treatment of non-consenting leaseholders during conversions.
– Transitional arrangements for new builds, including exemptions and lender responses.
– Sector readiness through training, policy updates, and consumer education.

These areas will determine how effectively the reforms serve their intended purpose without unintended consequences.

## Conclusion

The Draft Commonhold and Leasehold Reform Bill represents an ambitious attempt to modernise and improve the leasehold system. While it promises meaningful change, careful attention is needed to ensure the reforms are practical and fair. Landlords and agents should engage with the consultation process and prepare for the operational and legal implications ahead.

Shabnam Ali-Khan, partner at Russell-Cooke and member of ALEP, provides expert insight into these reforms.

## Suggested internal link anchors

– ground rent cap
– leasehold reform bill UK
– commonhold tenure
– leasehold forfeiture abolition
– leasehold conversion process
– mixed-use developments
– lease enforcement scheme
– freehold acquisition
– leasehold dispute resolution
– landlord legal responsibilities
– leasehold enfranchisement
– leasehold valuation impact

## TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/