What The Leasehold Reset Could Mean For Flat Owners
Owning a home on a leasehold can be frustrating. You’ve got your flat with a diminishing lease and a long list of rules and charges, often overseen by a freeholder you never actually meet. And while disagreements can make things feel uneven, many freeholders would say they’re simply fulfilling the legal responsibilities the system expects of them.
That’s the backdrop to the government’s Draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, which aims to make commonhold a realistic default for flats in England and Wales, while also changing some of the sharpest edges of today’s leasehold system.
Leasehold vs Commonhold UK Differences Explained
Under leasehold, you typically own a long lease (often 99 to 999 years) rather than owning the property outright. The freeholder retains ultimate ownership, and leaseholders can face ground rent, service charges, permission fees, and the cost of extending the lease.
There is also the threat of Leasehold forfeiture. This is the legal process where a freeholder can end a lease and take back the property if the leaseholder seriously breaches the lease (for example, by not paying ground rent or service charges). It’s a powerful remedy because the leaseholder can lose their home entirely, even over relatively small arrears in some cases.
Commonhold, by contrast, is designed so flat owners own their home outright and jointly manage the shared parts of the building through a commonhold association. It’s a model used in other countries in various forms (think condominiums and strata-style living), and it has technically existed in English law for years, but has barely been used in practice.
What does the bill actually propose?
The government’s own summary says the draft bill is intended to:
- make it easier for existing leaseholders to convert to commonhold, if they choose
- ban the use of leasehold for most new flats
- cap ground rents at £250 a year, moving to a “peppercorn” (nominal) amount after 40 years
- abolish the threat of leasehold forfeiture and replace it with a more proportionate enforcement approach
It’s also explicitly a draft bill going through pre-legislative scrutiny, so details can shift before anything becomes law.
Convert leasehold to commonhold: what might become easier?
A big stumbling block historically has been the practical difficulty of conversion. The government guide explains that the reforms are meant to create a clearer route for conversion and improve the commonhold framework overall.
In plain terms, the direction of travel is: fewer veto points, a more workable process, and a tenure structure that doesn’t rely on a third-party landlord. That matters if you’ve ever thought “why am I paying for something I don’t control?”
Still, this is not a flick-of-a-switch change. Conversions can be complex, especially in mixed-use buildings or where parts of the building are shared with commercial units.
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Ground rent cap £250: simple headline, messy reality
The £250 cap is the bit most people will spot first because it’s easy to understand and easy to compare to what you pay now. The guide to the draft bill sets out the proposed cap and the move to a peppercorn amount after 40 years.
But whether it changes your costs, and by how much, depends on what your lease says today. Ground rent is only one moving part. Service charges, building maintenance, and disputes about standards and procurement are often where the real stress sits.
Leasehold forfeiture abolished: why that’s not a small tweak
Forfeiture is one of those words that sounds medieval because, frankly, it is. The government guide describes removing forfeiture and replacing it with a fairer and more proportionate enforcement scheme.
Even if you never expect to be in arrears, this matters because it changes the overall power dynamic in disputes. Many leaseholders argue, it’s hard to negotiate fairly when one side holds an existential threat over the other. For example, ordinarily they might withhold payment for what they deem to be unjust charges by freeholders but daren’t take the risk due to the threat of forfeiture.
Where does insurance fit into all this?
Whether a building is leasehold or commonhold, it still needs proper protection. Buildings insurance, property owners’ liability and cover for shared areas don’t disappear just because the ownership model changes.
If more blocks move towards commonhold, the practical questions become: who arranges the cover, how decisions are made, and how the policy is evidenced for lenders and owners. It’s all perfectly doable but the governance and paperwork matter more than ever.
In a commonhold setup, the Commonhold Association is responsible for arranging the building insurance. Just as with a freehold, the association can handle this directly or outsource it to a managing agent. A single policy covering the entire structure and all communal areas is put in place, with each unit owner contributing through their commonhold charges.
As with any legal reform, the detail and the timeline will be the real test. For now, the bill signals something important: a move away from a system that many homeowners feel was designed for someone else.
