The government has published its long-awaited draft bill on commonhold and leasehold in what it says is a “game-changing shake up” of the leasehold system.
The announcement was made in a TikTok video by the prime minister, Sir Keir Starmer, in which he set out his plans for reform. The bill includes a £250 a year cap on ground rent and a ban on new leasehold flats, which the government said will put an end to the feudal leasehold system which dates to medieval times, and “fundamentally rewire home ownership across England and Wales”.
Forfeiture, which can see leaseholders lose their home and its equity they built up by defaulting on a debt as low as £350, will also be abolished.
In the TikTok video, the prime minister said:
“Good news for homeowners, we’re capping ground rent at £250. That means if you are a leaseholder, and your ground rent is more than £250, you’ll be paying less.
“And I’ve spoken to so many people who say this will make a difference to them of hundreds of pounds.
“That’s really important because the cost of living is the single most important thing across the country. So this is a promise that we said we’d deliver and I’m really pleased that we’re delivering on that promise.”
In a written statement, secretary of state for housing Steve Reed added:
“We said we’d be on the side of leaseholders – which is why today we are capping ground rent – helping millions of leaseholders by saving them money and giving them control over their home.
“The leasehold system has tainted the dream of home ownership for so many. We are taking action where others have failed –strengthening home ownership and calling time on leasehold for good.”
A new process to make it easier for existing leaseholders to convert to commonhold will be introduced under a revamped commonhold model, in which homeowners will receive a stake in the ownership of their buildings and be given a stronger say in the issues that affect them. They will also receive greater control over how the building is managed and the bills they pay.
The “reinvigorated” commonhold system will work with all types of developments and mortgage lenders, the government’s statement said, with strong management rules in place around repairs and leadership, and greater rights for homeowners.
Current leaseholders will be given the opportunity to switch to commonhold, if the majority of residents agree.
The reforms build on action currently being undertaken by the government to implement the Leasehold and Freehold Reform Act 2024, including increased transparency over service charges so that leaseholders can better hold their landlords to account.
A consultation has been launched alongside the draft bill to seek views from industry and consumers on the plans to ban new leasehold flats. Responses are invited from property professionals and consumers on the scope of the ban, the case for exemptions, how a ban should operate, and when a ban should start.
Although the announcement was widely welcomed by the property sector, there was also a degree of scepticism from industry bodies and leasehold campaigners
The Society of Licensed Conveyancers, while welcoming the “long-overdue measures to tackle unfair leasehold practices,” warned that commonhold reforms must not create new risks for homeowners and conveyancers.
“The SLC supports the government’s commitment to reforming a leasehold system that has, for too long, disadvantaged homeowners,” it said.
“Measures such as capping ground rents, abolishing forfeiture for long residential leases and reforming estate rentcharge enforcement represent meaningful progress and will provide tangible benefits to consumers.
“However, the society has expressed serious concerns about the bill’s ambition to make commonhold the default tenure for new flats and to accelerate the conversion of existing leasehold buildings, without sufficient evidence that the system is ready to operate at scale.
“Licensed conveyancers are the professionals responsible for delivering property law reform on the ground, and the SLC cautions that commonhold remains largely untested in England and Wales. Unlike leasehold, commonhold places the ongoing management, financial decision‑making and governance of buildings directly in the hands of homeowners, many of whom will have little experience of the legal and administrative responsibilities involved.
“The society is particularly concerned that the bill risks exposing consumers to new forms of dispute, delay and financial uncertainty. Commonhold arrangements rely heavily on collective decision‑making, with greater scope for deadlock between owners, increased reliance on tribunals, and limited safety nets when relationships within a building break down.
“From a conveyancing perspective, the bill introduces a step‑change in complexity. New title structures, commonhold community statements replacing leases, automatic Land Registry changes and transitional arrangements affecting existing interests will all require careful navigation. During the transition period, this significantly increases the risk of error, delay and consumer confusion.”
Reform should be introduced at a pace that prioritises consumer protection and market stability, the SLC added.
“This includes meaningful engagement with conveyancers, clear and standardised documentation, robust transitional safeguards, and investment in education for both professionals and the public.
“The SLC stands ready to work constructively with policymakers to ensure that leasehold reform delivers fairer, more sustainable homeownership – without creating a new generation of property problems under a different legal framework.”
Linz Darlington is MD of lease extension specialists Homehold and a longstanding advocate for leasehold reform.
He said:
“A cap at £250 is a sensible choice. It means that freeholders will continue to receive an income stream for the moment, while recognising that this will be eroded over time by inflation and eventually removed after 40 years.
“For leaseholders, while they may be disappointed that they must fork over ‘money for nothing,’ a cap at £250 will make the payment more manageable and will likely solve issues with remortgaging.”
However, he pointed out that much of the Leasehold and Freehold Reform Act 2024 is yet to be implemented 18 months after it gained Royal Assent.
“In November 2024, Matthew Pennycook promised in a ministerial statement that reform would happen ‘as soon as possible,’ and he committed to consulting on the rates used to calculate lease extension prices by ‘next summer’ (2025). These promises have not been kept, which means this reform is not of any tangible benefit to leaseholders.
“The cap is contained within the draft Commonhold and Leasehold Reform Bill, which is 363 pages long and highly contentious. For the cap to be of any benefit to leaseholders, we need this passed promptly and onto the statute books. At the current pace of reform, it may not be for many years to come.
“Leaseholders are tired of hearing what the government intends to do ‘in due course.’ The speed of leasehold reform is glacial. We need meaningful reform and prompt implementation.”
The National Leasehold Campaign (NLC) acknowledged the relief the £250 cap will offer leaseholders paying high ground rents and said it recognised the benefits of establishing commonhold as the default tenure for communal buildings.
“We have campaigned for peppercorn ground rents and an end to this abusive system for years” said NLC co-founder Katie Kendrick.
“Whilst today’s announcement on ground rents falls short of immediate peppercorn ground rents, this bill as a whole is another step forward in dismantling the leasehold system in England and Wales.”
And, whilst the NLC said the banning of ground rents “will no doubt steal the headlines”, it shouldn’t go unnoticed that the bill will abolish “the draconian threat” of forfeiture.
“Forfeiture is a tool we have seen used by unscrupulous freeholders to threaten leaseholders for debt as low as £350, making their lives a living hell,” said NLC co-founder Cath Williams.
“We are so pleased to see the end of this included in the draft commonhold bill.”
The Association of Leasehold Enfranchisement Practitioners (ALEP) welcomed the bill, describing it as an important step in the government’s long stated aim to modernise tenure structures in England and Wales and “represents the most substantial shift in land tenure for more than two centuries”.
Mark Chick, ALEP director and senior partner at Bishop & Sewell LLP, said:
“ALEP has consistently supported the government’s intention to reform leasehold. Its position is that reform must be workable, evidence-based and developed in partnership with the professionals who will be responsible for implementing it.
“We welcome the consultation on commonhold. If commonhold is to succeed as a viable alternative to leasehold, its introduction must be practical, transparent and legally robust and this will require input from the wide range of professionals involved.
“There is clear political and public pressure to accelerate change, but reforms of this magnitude must balance speed with care. Rushed legislation rarely delivers clarity or certainty. The experience of implementing Leasehold and Freehold Reform Act (LAFRA) shows how important it is to get the detail right.
“Similar comments apply to the proposed cap and eventual sunset on ground rents which will potentially be susceptible to Human Rights Act challenges, although the government has been at pains to set out its approach in a policy statement for this very reason.”
Draft Commonhold and Leasehold Reform Bill
Moving to commonhold: banning leasehold for new flats consultation
Read tomorrow’s Today’s Conveyancer for more reaction to the draft bill and consultation.
