Leasehold reforms revealed: how the changes help you

Long-awaited leasehold reforms are finally starting to make their way through parliament but the changes won’t be immediate.

Housing minister Matthew Pennycook blamed “unforeseen delays” in the legislative process that meant the draft Commonhold and Leasehold Reform Bill wasn’t published – as promised – before the end of 2025.

But the Bill has now been introduced, promising a cap on ground rents and a shift to commonhold rather than leasehold as the default form of tenure for new-build homes.

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Currently, the default tenure for new-build homes, particularly flats, is leasehold, but rising ground rents and unregulated service charges have made it harder to sell these properties – affecting house prices – and mortgage lenders have been more cautious about lending against them.

The government had issued a series of consultations to reform the controversial leasehold system of property ownership in the UK in early 2025.

Ministers have vowed to bring the feudal leasehold system to an end and overhaul how people own their new-build homes and common areas.

But many of the changes were already taking longer than expected as the Labour government decided in the summer to consult on many of the changes to fill what it says are gaps left from the legislation of the previous Tory government.

Many of the consultations ended in September 2025 but Pennycook admitted that the government ran out of time to introduce proposed legislation on the reforms to parliament.

This angered many leaseholders who have been waiting for reforms, which should make it easier to sell or remortgage their homes.

What are the latest leasehold reforms?

The Labour government promised to finish off leasehold reforms when it came to power in July 2024.

The King’s Speech mentioned the Leasehold and Commonhold Reform Bill that promised to “bring the feudal system of leasehold to an end".

Reforms include banning new leasehold flats, making commonhold the default housing tenure and capping ground rents as well as making it easier to understand and challenge service charges.

Cap on ground rents

The government has announced that ground rents will be capped at £250 per year for leasehold properties in England and Wales, once the legislation passes.

The reforms will also see a ban on the sale of new leasehold flats and scrapping of rules which can see people lose their homes for owing as little as £350 in unpaid ground rent or service charges.

Service charge transparency

Many leaseholders complain that it is unclear what their service charges are covering and if they are paying a fair rate for repairs.

The government consultation sought views on new standardised service charge demand forms, annual reports, service charge accounts and administration charges.

These would spell out clear and detailed information about how service charges are calculated and spent.

Moving from leasehold to commonhold

The government released a white paper in March 2025 to discuss ways of shifting to a commonhold form of property ownership to replace leasehold.

Currently, most new-build developments are owned under a leasehold system.

This gives the homeowner the right to occupy land or a property for a set period which reverts back to the freeholder once this expires.

The value of the property can drop and it can be hard to get a mortgage when the lease term gets lower unless property owners pay high sums to extend it or buy the freehold.

The argument for leasehold is that it makes it cheaper to buy a property as it excludes the price of the land while the owner doesn’t have to worry about maintaining the common areas.

But critics have said this means leaseholders don’t own their property outright and have been forced to pay potentially escalating ground rent costs in some cases, while unknown landlords and property managers can set their own service charges and often neglect buildings.

In contrast, commonhold ownership lets buyers fully own their property outright, with no expiring term or need to save to extend a lease.

They can have a say in managing their building and have the benefit of not needing to pay ground rent or have a third-party landlord.

There are no leases, with the rights, responsibilities and rules for all property owners set out in the Commonhold Community Statement (CCS).

Each property owner becomes part of a commonhold association upon buying their home, which oversees both the governance and management of the building unless it decides to bring in a managing agent – which will be accountable to the commonholders, not to a landlord.

Commonhold homeowners will have a vote on the annual budget, which is for upkeep and for maintenance of the building, and on the charges they have to pay – equivalent to what service charges are used for under the current leasehold system.

Homeowners will also be able to effectively plan for longer-term repairs or maintenance under commonhold, and vote on issues that affect them.

This system has previously been recommended by the Law Commission and is popular in Europe, New Zealand, Australia, the US and other parts of the world.

The shift has been broadly welcomed but industry insiders warn it won’t be easy to make the transition.

Scott Goldstein, a partner at law firm Payne Hicks Beach, said: “The concern is to make sure that the system is ready to cope.

“Lenders must be encouraged to give mortgages to purchase flats held on commonhold.

“There must be robust financial controls in place to ensure commonhold blocks have the resources they need to manage their properties.

“Finally, as commonhold blocks are always run by property owners, many more of us will be involved in property management.

“The government needs to provide easy to follow resources to educate and train all of us about the rights and responsibilities of commonhold."

Will this help current leasehold homeowners?

Banning the sale of new-build leasehold flats, once introduced, will help buyers in the future, but activists warn that the existing 5 million leasehold property owners still need support.

The government has already removed the two-year time period that property owners previously had to wait to extend their lease.

Leaseholders also no longer have to pay a freeholder’s legal fees when making a right to manage claim to take over the running of a development.

But the Bill still needs to be considered by MPs and the government has indicated that it may not pass until 2028.

It is also still unclear when changes will be made on valuing lease extensions.

Katie Kendrick, founder of the National Leasehold Campaign, said: “While focusing on preventing future leasehold abuses is crucial, it’s equally vital to address the plight of existing leaseholders currently bound by the inequitable leasehold system.

“Commonhold conversion mechanisms are essential to offer an escape route for those trapped, alongside tackling issues like existing ground rents, reforming the valuation process for enfranchisement and regulating managing agents. Ensuring these existing issues are resolved alongside the move to Commonhold will ensure a fairer and more equitable housing landscape for all flat owners.”

Pennycook said in January that following an unsuccessful high court challenge from freeholders last year, a consultation on valuing leasehold purchases is being prepared.

He said: “While it is important that we take the time to ensure that reforms are watertight, I appreciate fully the need to act as quickly as we can to provide relief for leaseholders across the country, particularly those with leases approaching 80 years.”