4th March 2026 | Caroline Vernon | Residential Real Estate, Ground Rent, Leasehold Reform

Major leasehold reform is firmly underway. Following publication of the draft Commonhold and Leasehold Reform Bill on 27 January 2026 developers face a reshaped environment for planning, structuring, and selling new-build homes. We outline below the key developments and the practical implications for developers on their current and future schemes.

The Government’s Direction: Commonhold by Default

The Government’s direction of travel: ending leasehold for new flats.  A consultation “Moving to Commonhold: banning leasehold for new flats” sets out the Government’s plan to introduce a full ban on selling new flats as leasehold, with limited exemptions.

This consultation confirms what the sector anticipated: the Government wants new flats to be delivered as commonhold by default.

The consultation emphasises that developers can help the Government understand how to manage the transition without disrupting the supply of new homes; particularly where developers have already begun selling off‑plan on a leasehold basis or hold land that is leasehold‑encumbered.

The draft Bill is explicit in its aims. It will:

  • Ban leasehold for new flats: With the detail of exemptions to be confirmed
  • Reinvigorate commonhold: Strengthening the framework originally established by the Commonhold and Leasehold Reform Act 2002 to make it easier for developers to adopt.
  • Cap Ground Rents: Existing ground rents will be capped at £250 per year, eventually phasing to a peppercorn after 40 years.
  • Abolish forfeiture: replacing it with a statutory “fairer and more proportionate enforcement scheme.”
  • Reform Estate Rentcharges: Removing the “draconian” remedies available to rentcharge owners for non-payment under sections 121 and 122 of the Law of Property Act 1925.

The reforms place commonhold, at the heart of future flat development. The draft Bill strengthens and modernises the commonhold framework, including provisions designed to:

  • Make it easier to use commonhold in mixed‑use and phased developments.
  • Give homeowners collective control over budgets, management and repairs.
  • Provide clearer conversion pathways for existing buildings.
  • Introduce new governance tools, including mechanisms for replacing directors and enforcing contributions.

Practical considerations for developers now

While the Bill is not in final form, the ultimate outcome is clear and developers should consider the preparation which will be required and how it may impact their plans.

  1. Review tenure strategy on all upcoming schemes

Given that new leasehold flats will be prohibited, developers should consider preparing the structure of forthcoming phases and pipeline sites as commonhold.

  1. Prepare for documentation overhaul

Drafting commonhold documentation (including Commonhold Community Statements, governance documents, budgeting, and phased development provisions) will require early planning.

  1. Managing transitional schemes

Developers midway through leasehold projects should identify plots already sold on a leasehold basis, consider if mixed tenure (leasehold for legacy plots and commonhold for future phases) is viable or whether a full pivot is required and engage early with lenders and managing agents on emerging standards.

  1. Sales messaging and purchaser education

Commonhold remains unfamiliar to many buyers and solicitors. Developers will need to prepare clear, consistent marketing materials explaining what commonhold ownership means, how collective control works, and the protections built into the new statutory framework. The Government is positioning commonhold as a fairer, more transparent model than leasehold, and buyers will need help understanding the differences.

Whether the reality of reforms will have the desired impact for homeowners remains to be seen. The cap on ground rents for existing leases is to be welcomed as it will remove the two-tier market and bring them in line with leases granted since the Leasehold Reform (Ground Rent) Act 2022. The removal of statutory remedies for rentcharge owners will have a positive impact on the marketability of burdened properties.

Will the reforms have the desired impact or will it create a slower system whilst all parties including solicitors, managing agents, lenders get to the grips with it?

Even in the commonhold structure, a managing agent will be required, to organise building maintenance, prepare accounts and deal with external professionals. Disputes relating to service and building costs and managing agents seem set to continue.

For developers at this stage, planning is a priority.

Find out more with our Real Estate Team

The transition from leasehold to commonhold is a generational shift in property law. Whether you are restructuring a current project or planning a new development, our team can help you navigate the 2026 reforms and protect your pipeline.

To discuss the impact on your upcoming schemes, please contact Caroline Vernon or a member of our Real Estate Team today.

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