A first look at the draft Commonhold and Leasehold Reform Bill

Property law specialist Ricky Allen, senior associate at Houldsworth Solicitors, breaks down the draft Commonhold and Leasehold Reform Bill and explores what it means for conveyancers.

I woke up on the morning the bill was released to find quite a few WhatsApp messages on my phone. Some were from family members, some from colleagues at my firm, and others from property lawyers who are friends of mine from other firms. All of them were passing on the same news: that the government had published the draft Commonhold and Leasehold Reform Bill.

Rather than starting my day doing what many property lawyers across England and Wales were probably doing, triaging overnight emails from clients and other conveyancers, I perused the 363 pages of the bill.

Leasehold reform has been talked about for years, but this is one of the rare moments where a piece of legislation feels genuinely significant for those of us dealing with property transactions day in, day out. While this is still a draft bill and subject to consultation and scrutiny, it marks a clear statement of direction.

The bill is wide-ranging, but its underlying message is consistent. The government is positioning this as the beginning of the end for the traditional leasehold model, with commonhold placed firmly at the centre of future flat ownership.

Ground rent reform

Part 3 of the bill deals with ground rent. The Leasehold Reform (Ground Rent) Act 2022 brought an end to ground rents for most new long residential leases granted after it came into force, but it did not assist the millions of existing leaseholders whose leases already contained high ground rents.

Section 136 of the draft bill seeks to address that gap by extending regulation to long residential leases that pre-date the 2022 act. In practical terms, and as reflected in the government’s policy statement, leaseholders will not be required to pay more than £250 per year in ground rent. Where an existing lease provides for a higher ground rent, that obligation will be capped at £250, with all regulated ground rents reducing to a peppercorn after a transitional period of 40 years.

From a conveyancing perspective, this is one of the most immediately impactful aspects of the bill. Ground rent provisions remain a frequent cause of lender concern, delayed exchanges, and aborted transactions, particularly where rents are high or escalate over time.

Estate rentcharges

Part 5 of the bill addresses estate rentcharges. Section 156 repeals the draconian enforcement remedies contained in section 121 of the Law of Property Act 1925, which have become a significant source of concern in modern freehold estate developments.

In practice, these powers have regularly delayed transactions, with conveyancers encountering lender objections, extended reporting on title, and the frequent need for deeds of variation or deeds of release to neutralise the risk. Many lawyers will recall that similar enforcement powers were removed for historic rentcharges by the Leasehold and Freehold Reform Act 2024, leading to questions by many of us as to why estate rentcharges were left untouched by the 2024 legislation.

The draft bill finally resolves that. Estate rentcharges will not disappear, but the most draconian enforcement remedies will. The ability to grant a lease of the property or take possession will be removed, with enforcement instead confined to recovery of the arrears as a debt or through court-supervised processes.

Commonhold moves from theory to default

Commonhold was first introduced more than 20 years ago by the Commonhold and Leasehold Reform Act 2002, with the intention of providing an alternative to leasehold ownership of flats. Under a commonhold structure, individual flat owners hold the freehold title to their own unit, while the building and shared parts are owned and managed collectively through a commonhold association. This model closely resembles apartment ownership systems that are well established such as condominium ownership in the United States and strata title systems in Australia and New Zealand.

Despite this, commonhold never gained traction in England and Wales. It was trialled on a small number of developments but remained, for most conveyancers, something that they had read about in a textbook rather than something they had ever come across in practice. Practical shortcomings in the original legislative framework, combined with limited lender and developer appetite, meant that leasehold continued as the default.

Part 1 of the draft bill seeks to change that by repealing and replacing the existing framework, sections one to 108 set out a redesigned commonhold regime intended to address the specific flaws that stalled adoption, including inflexible conversion rules, weak governance structures, limited lender protections, and a lack of clarity around funding and enforcement.

This shift is reinforced by Part 2 of the bill. Section 109 introduces a ban on the grant of most new long residential leases of flats, subject only to limited categories of permitted leases. For solicitors involved in new-build work, this marks a fundamental move away from traditional leasehold drafting towards advising on commonhold units, common parts, and the constitutional documents that underpin commonhold ownership.

Making conversion from leasehold to commonhold a realistic option

The draft bill is not limited to future developments. A significant focus of Part 1 is on making conversion from leasehold to commonhold a workable option for existing buildings. Under the current legislation, introduced by the Commonhold and Leasehold Reform Act 2002, conversion effectively required unanimous consent from all leaseholders. In practice, this proved to be an almost insurmountable barrier, meaning that a single dissenting leaseholder, lender, or missing party could prevent conversion altogether.

The draft bill seeks to address this by introducing a new and more flexible conversion framework. This is supported by statutory rights to acquire commonhold units under section 122 and rights to conversion under section 123, reducing the ability for minority objections to block conversion where there is sufficient collective support.

These provisions are intended to sit alongside, rather than replace, existing enfranchisement rights, but they materially change the landscape. Leaseholders considering collective enfranchisement may increasingly ask whether conversion to commonhold offers a better long-term solution than simply acquiring the freehold.

For conveyancers, this means commonhold can no longer be treated as a niche topic. Advising on enfranchisement, lease extensions, and long-term asset management will increasingly require a working understanding of how conversion to commonhold operates in practice.

The abolition of forfeiture

Part 4 of the bill introduces a fundamental change to the way breaches of long residential leases are enforced. Section 138 abolishes forfeiture entirely, removing the ability for a landlord to bring a lease to an end and take back the property as a remedy for breach.

In place of forfeiture, sections 137 to 153 establish a new statutory lease enforcement regime. Under this framework, landlords will be required to pursue enforcement through the court, with remedies focused on resolving the breach rather than extinguishing the lease. The court will have powers to make remedial orders, regulate the recovery of costs, and, only in serious cases and as a last resort, order a sale of the leaseholder’s interest.

The clear shift is away from the historic all-or-nothing nature of forfeiture towards a system based on proportionality, transparency, and judicial oversight. For conveyancers advising landlords, managing agents, and lenders, this will require a recalibration of how enforcement rights and risks are explained. For leaseholders, it removes one of the most severe and anxiety-inducing features of leasehold ownership and replaces it with a more predictable and measured enforcement process.

What this means for conveyancers now

Although the bill is still in draft form, its proposals are significant and, for many, long overdue. They point towards a property system where commonhold is normal, leasehold is residual, and some of the most entrenched transactional risks are reduced or removed altogether.

For conveyancers, this should result in reduced concern around ground rent provisions and estate rentcharge enforcement should mean fewer lender objections and fewer transactions delayed by technical enforcement risks.

On the other hand, there is an investment of time to be made. As commonhold moves from the margins towards the mainstream, conveyancers will need to develop a working understanding of commonhold structures, documentation, and governance. Familiarity with commonhold will increasingly become part of core residential practice, rather than a specialist or academic topic.

This is a reform the profession has been waiting for. Whether it ultimately delivers on its promise will depend on how the detail emerges through scrutiny and secondary legislation.

The information provided in this article reflects only a narrative of some elements to consider on the topic. The article does not contain considered legal advice and should not be relied upon as advice.

About the author

Ricky Allen handles a wide range of property and conveyancing matters, with particular expertise in lease extensions, the rectification of defective titles and leasehold enfranchisement matters. He also has a niche practice advising Spanish-speaking clients from Spain and Latin America in relation to property transactions in England. He has become a trusted professional, regularly recommended by estate agents, mortgage brokers, and commercial clients both nationally and internationally.