The draft Commonhold and Leasehold Reform Bill, published in January 2026, proposes significant changes to flat ownership in England and Wales. The bill is designed to make commonhold the standard for new flats, replacing the traditional leasehold system.
Under commonhold, flat owners will hold the freehold of their individual units, eliminating diminishing lease terms and ground rents. Shared areas of buildings, such as roofs and corridors, will be owned collectively by a commonhold association, of which every flat owner is automatically a member.
While the bill offers benefits like capped or zero ground rents and increased control for flat owners, it also introduces new responsibilities. Directors of commonhold associations, typically volunteer flat owners, will take on statutory legal obligations, including filing annual accounts.
The legislation does not mandate professional management for commonhold associations, which could leave residents in smaller blocks directly responsible for compliance. Additionally, the bill removes the threat of forfeiture for minor breaches, but the enforcement mechanisms for unpaid contributions or rule breaches are described as more cumbersome than under leasehold.
A potential two-tier market risk is anticipated during the transition, with newer commonhold properties possibly being perceived differently from existing leasehold stock. The ground rent cap, expected around late 2028, may help some existing leasehold flats, but lenders' policies on commonhold structures are still developing.