Own or looking to buy a flat? How new leasehold reforms could impact you

In January 2026, the UK government published its draft Commonhold and Leasehold Reform Bill, proposing a number of measures affecting leaseholders in the UK. It follows on from the Leasehold and Freehold Reform Act 2024, which introduced changes to strengthen leaseholders’ rights to extend their lease, buy their freehold, and take over management of their building. Although now law, many of the 2024 Act’s provisions are not yet in force and will require further consultation and secondary legislation.

What are key elements of the new Commonhold and Leasehold Reform Bill?

This latest bill sets out a series of major proposals in a significant shake‑up of the leasehold system.

• Ground rent will be capped at £250, and after 40 years will be reduced to a peppercorn rate (effectively nothing). It is expected the cap could come into force in late 2028.
• New leasehold flats will be banned, except in limited cases. All new flats will be created as commonhold, meaning you own your flat outright as well as a share in the building with your neighbours.
• Existing leaseholders will be given easier rights to convert to commonhold.
• Forfeiture will be abolished. Currently, some leaseholders can lose their home for arrears as low as £350.
• Freehold homeowners on estates will receive stronger protections against excessive estate charges for shared spaces such as roads, parks and open areas.

What do the new reforms mean for leaseholders and the property market?

Jeremy Dharmasena leads Knight Frank’s Leasehold Reform & Litigation department. His team advises both leaseholders and landlords on lease extensions and enfranchisements of flats and houses, enabling leaseholders to buy the freehold of their residential property. Here he shares his insight into the proposed reforms and their potential impact on the market.

Q: What does the proposed ban on new leasehold flats mean in practical terms for future buyers and current leaseholders, and how soon might commonhold developments become the norm?

Dharmasena: It remains to be seen exactly how the changes will be implemented, and until we have a clearer picture it is difficult to assess how the market will react to this new form of tenure. The new law is unlikely to take effect before the end of 2028, when it is intended that all new-build flats will be commonhold.

In the main, a simplified structure of owner-led tenure will be welcomed. However, some fear it will not eradicate the liabilities currently imposed on tenants with service charges being replaced with similarly structured charges in all but name. 

Q: How might service charges, building management and maintenance practices change under a commonhold system where homeowners run the building collectively?

Dharmasena: The current leasehold system sets out a clear structure of responsibilities between landlords and leaseholders. With commonholds, particularly for larger blocks, there may still be a need for managing agents to deal with the practicalities of repairs and maintenance. You may get homeowners who are prepared to have a higher degree of involvement, but there is a possibility some may avoid responsibility, especially around the liabilities involved in building and fire safety. There could be a saving in service charges, but the underlying costs of running and maintaining a building will remain.

Q: How do you think these reforms will affect the resale market for existing leasehold flats, and the demand for new-build flats?

Dharmasena: The market will clearly need to adjust. There could be a two‑tier market for a short period until commonhold is better understood and seen as a practical success. Overseas buyers may adapt more quickly, as the proposed structure is similar to what exists in other countries, though not without issues in some markets. All buyers will welcome the absence of the property being a wasting asset.

For developers, there will be a degree of uncertainty. They may hesitate to build if lending institutions show caution in mortgaging commonhold properties. However, once commonhold becomes the norm, the market will adjust and confidence is likely to grow. 

Q: How easy will it be to convert existing leaseholds into commonholds?

Dharmasena: Somewhat controversially, only 50% of leaseholders are needed to agree before a building can be converted to commonhold. The precise mechanism is not yet in place, and several anomalies still need clarification. There is an emphasis on the Tribunal settling disputes, but they are already dealing with substantial caseloads, which may be further impacted by new issues arising from the Renters’ Rights reforms.

Q: For existing leaseholders, should they extend their lease now or wait?

Dharmasena: It’s important to seek individualised, expert advice, as one size does not fit all and every situation is different. Marriage value - the theoretical uplift in value created by a lease extension - applies when a lease has fewer than 80 years remaining, with the cost typically shared equally in lease negotiations between landlord and tenant. Marriage value is set to be abolished under the Leasehold and Freehold Reform Act 2024, but it is not yet clear when this will take effect. In general, if your lease is over 80 years, you should consider extending, subject to other factors such as ground rent.