The government’s draft Commonhold and Leasehold Reform Bill currently excludes measures to address the issue of “embedded” management companies, leaving leaseholders without new statutory powers to challenge these arrangements. This announcement follows recent reforms capping ground rents, but highlights ongoing gaps in leasehold reform concerning management company practices.

Embedded management companies remain unaddressed

Embedded management companies are firms effectively integrated into residential developments by freeholders or developers, often at the point of construction. Leaseholders can find themselves automatically tied into these companies’ services, with limited ability to switch providers or regain control over management decisions.

Labour MP Neil Duncan-Jordan raised concerns about these companies in a written parliamentary question on 17 April 2026. He asked whether the government would ensure the Commonhold and Leasehold Reform Bill includes retrospective powers allowing leaseholders to remove embedded managers without the need for no-fault litigation, especially where historic structural neglect has been proven.

Housing Minister Matthew Pennycook responded by acknowledging the difficulties leaseholders face but confirmed that the draft Bill contains no provisions relating to embedded management companies. He noted that the previous Leasehold and Freehold Reform Act 2024 also lacked measures to prevent managing agents from using subsidiary or associated organisations to deliver services.

Current options for leaseholders

Mr Pennycook advised that managing agents who refuse to vacate a site after losing a contract may be challenged through legal routes. Landlords can seek advice on possible actions, including making formal complaints to relevant redress schemes or applying for injunctions in the County Court.

Leaseholders, including resident directors, are encouraged to seek guidance and free initial legal advice from the government-funded Leasehold Advisory Service (LEASE). However, without new statutory powers, leaseholders remain reliant on existing legal mechanisms, which can be costly and complex.

Context: ground rent reforms

This development comes alongside the government’s announcement to cap ground rents in England and Wales at £250 per year for leaseholders. While this reform offers financial relief, it does not address the broader issues of management company control and leaseholder autonomy within developments.

What this means for landlords

For landlords and managing agents, the absence of new provisions on embedded management companies means the status quo largely remains. Those involved in managing leasehold properties should be aware that embedded management structures continue to operate without specific legislative constraints, potentially affecting leaseholder relations and management contracts.

Landlords should also note the capped ground rents, which may influence leasehold valuations and income streams. Staying informed about ongoing consultations and future legislative developments is essential to anticipate further changes in leasehold governance.

Source: Based on reporting from Property118

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