The government published its draft Commonhold and Leasehold Reform Bill in January 2026 — the most significant proposed change to property ownership in England and Wales in a generation. If it becomes law, new leasehold flats will be banned, ground rents will be capped, and existing blocks will be able to convert to commonhold with a 50% majority rather than unanimous consent. Here is what it means for leaseholders and — critically — why your service charge history matters more than ever before you convert.
Commonhold is a form of property ownership for flats and shared buildings where each unit owner owns their flat outright as a freehold, and they collectively own and manage the shared parts of the building through a commonhold association — a company in which all unit owners are shareholders.
Under commonhold, there is no landlord. There is no freeholder collecting ground rent. There is no managing agent appointed by a third party over whom residents have no control. The residents run the building themselves (or appoint an agent of their choice who they can replace).
Commonhold has existed in England and Wales since 2002 but has barely been used — fewer than 20 schemes were ever built under it, largely because mortgage lenders were reluctant to lend on commonhold properties and developers preferred leasehold because ground rent provided an income stream. The draft 2026 Bill is designed to change this fundamentally.
The draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, contains several major proposals:
The draft Bill proposes prohibiting most new leasehold flats and making commonhold the default. This is proposed legislation, not a ban currently in force, and the final scope and commencement remain subject to the parliamentary process.
Currently, converting an existing leasehold block to commonhold requires unanimous consent from all leaseholders — a near-impossible threshold in large buildings. The draft Bill reduces this to 50% of qualifying leaseholders, making conversion practically achievable for the first time.
The draft Bill proposes capping existing ground rents at £250 per year, changing to a peppercorn after 40 years. Until legislation is enacted and commenced, the contractual ground rent remains governed by the existing lease and current law.
The draft Bill proposes replacing forfeiture with a different enforcement scheme. This is not yet the current legal position, so existing enforcement risks must not be ignored.
The Housing Committee has recommended that the Bill include an independent statutory regulator for property managing agents with the power to sanction agents and remove their licence to operate. The government is consulting on this.
It is important to be clear: the draft Bill has not yet been formally introduced to Parliament. It is in a pre-legislative scrutiny phase. Here is a realistic assessment of when different elements might take effect:
Pre-legislative scrutiny began. Housing Committee published its report in May 2026.
Government confirmed the Commonhold and Leasehold Reform Bill will be brought forward in the current parliamentary session.
The Housing Committee has urged introduction by autumn 2026. Not confirmed.
Government has indicated late 2027 as a target for the £250 ground rent cap.
Housing Minister has said the ban is “highly unlikely” before the end of the current Parliament.
Separate from the new Bill — LAFRA 2024 transparency and service charge provisions continue rolling out through 2026 under secondary legislation.
The leasehold system is not going away quickly. Some provisions of LAFRA 2024 are in force, while several major service-charge transparency measures still require implementation. Existing rights under the Landlord and Tenant Act 1985 remain available today.
If you own a leasehold flat today, the practical implications of the draft Bill are:
You already have important rights under existing service-charge law. A LeaseScan audit applies the law currently in force, checks your lease and evidence, and labels future reforms separately.
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This is the part most guides don’t cover — and it is critically important.
When a leasehold block converts to commonhold, the new commonhold association takes over responsibility for the building’s finances. But the historical service charge accounts from the leasehold period do not disappear. They represent money that was collected from leaseholders and either spent or held in trust.
Before your building converts to commonhold, it is essential to understand:
How much is in the sinking fund? Is it adequate for the building’s planned maintenance? A conversion that leaves the commonhold association with an empty reserve fund means leaseholders will immediately face large special assessments to fund repairs.
If your managing agent has been overcharging for years, conversion to commonhold does not automatically recover that money. You need to challenge overcharges before conversion, while the leasehold framework (and your Section 27A tribunal rights) still apply.
Commonhold associations can appoint whatever managing agent they choose — or manage the building themselves. But making a good decision about your new arrangements requires understanding exactly how your current agent has been performing. A multi-year audit provides that record.
LAFRA 2024 contains enhanced rights to request historical information. The government said in July 2026 that it plans to commence this measure as soon as possible in 2027. Until then, use the information rights currently available and request older records voluntarily where appropriate.
Practical point: If a building is considering conversion, an evidence-led review of available accounts may help establish a financial baseline. Any historic recovery or transfer issue requires case-specific professional advice.
Currently, the residential leasehold sector is completely unregulated — anyone can act as a managing agent and handle service charges without qualifications, safety knowledge, or expertise.
The Housing Committee’s report on the draft Bill has recommended an independent statutory regulator for property managing agents with the power to sanction agents and remove their licence to operate. If implemented, this would be a fundamental change to the industry.
In the meantime, the Property Institute (formerly ARMA) offers voluntary accreditation, but this has no legal force. If your managing agent is not TPI-accredited, there is currently no regulatory body you can complain to with enforcement powers — only the First-tier Tribunal for specific charge disputes.
Under commonhold, your association chooses its own managing agent and can replace them at any time. This is one of the most powerful practical benefits of conversion — you are no longer locked into whoever the freeholder appointed.
Given that commonhold conversion is likely several years away, here is the most practical action plan for leaseholders in 2026: