Draft Commonhold and Leasehold Reform Bill: £250 ground rent cap and an end to forfeiture proposed
The draft bill published on 27 January 2026 would cap existing ground rents, abolish forfeiture of long residential leases and make commonhold the default for new flats. It is not law yet, and the government has given no timetable.
What happened
On 27 January 2026 the government published the Commonhold and Leasehold Reform Bill in draft for pre-legislative scrutiny. In July 2026 it restated its aim to end leasehold, but gave no date for the bill to be introduced to Parliament.
The main proposals are:
- Ground rent cap. Ground rents on existing residential leases would be capped at £250 a year, falling to a peppercorn after 40 years.
- No more forfeiture. Landlords could no longer take back a long residential lease for breach. A new court enforcement scheme would replace it, with orders to put things right, orders for sale and costs orders.
- Commonhold for new flats. New long leases of flats would be banned in most cases, so new flats would be sold as commonhold. Exemptions are expected for shared ownership and some home finance.
- Easier conversion. A new commonhold regime would let existing blocks convert with the agreement of 50% of qualifying leaseholders, rather than everyone.
- Estate rentcharges. Old Law of Property Act 1925 remedies that let rentcharge owners take possession would go, with a 30-day notice before enforcement.
What it means for your building
None of this applies yet, and the details may change during scrutiny. For a block that already owns its own freehold, the bigger questions are whether converting to commonhold would be worth it, and how a ground rent cap would affect any ground rent your company collects. For leaseholders paying a high ground rent to an outside freeholder, the cap could change the value and saleability of their flats.
What to do now
- Do not rely on the cap in any sale, purchase or lease extension yet.
- If your company collects ground rent, note how much and from which leases, so you can see the effect of a cap.
- Watch for the bill’s introduction to Parliament. We will report each stage.
This is general information about proposals for England and Wales, not advice.
How Freeholdpilot helps
Freeholdpilot keeps each lease’s key terms, including ground rent, in one place, so a board can see quickly which flats a change in the law would affect.
Questions
Is my ground rent capped now?
No. The cap is a proposal in a draft bill. It would need to pass through Parliament and be brought into force before it applies.
Would a share-of-freehold block have to convert to commonhold?
Under the draft, conversion would be possible with the agreement of 50% of qualifying leaseholders rather than everyone, but existing blocks would not be forced to convert.
Sources
This is general information about the law in England and Wales unless it says otherwise, not legal advice for your building. For advice, speak to a solicitor or ask us to introduce one of our partner firms.
