Leasehold reforms: how the changes could help you

Long-awaited leasehold reforms appear to be facing new delays after the housing minister Matthew Pennycook suggested the government never vowed to “immediately abolish” the form of tenure.

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.

Despite promising legislation by the end of 2025, the government published its draft Commonhold and Leasehold Reform Bill in January 2026, proposing 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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The Bill is first being scrutinised by MPs on the Housing, Communities and Local Government (HCLG) Committee.

But while leaseholder homeowners and campaigners may have hoped that this was a sign that support was in its way for those stuck in hard-to-sell or remortgage homes, Pennycook has suggested change will take time.

Speaking at an Institute for Government event, Pennycook said the Labour government made a “clear and unambiguous” commitment in its manifesto to bring the feudal leasehold system to an end.

He said the government was committed to “firmly shutting the door on leaseholds’ future use and opening easy and effective escape routes for those living under it today so that we rapidly reduce of existing leasehold.”

But he added: “In making that manifesto commitment to bring the leasehold system to an end, we were not promising to immediately abolish leasehold outright.

“If outright abolition had been our intention, we would have stood on a manifesto that promised as much.”

He later told journalists that due to the complexity of the changes, the reforms may not actually come in during this parliament.

That means leaseholders may have to wait until after the general election in 2029 for any changes and that assumes the Labour government is still in power.

Responding to the comments, the National Leasehold Campaign said:” Leasehold has long been described as complex. Leaseholders have heard that explanation for more than nine years. Complexity is not the problem — delay is. It cannot continue to be used as a shield for inaction while millions remain trapped in an unfair and outdated system.”

Here are the changes that the government has committed to for leaseholders.

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

In January 2026, the government 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?

There is no set timetable for change yet but 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.

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

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

When will leasehold reform changes be introduced?

The HCLG Committee has finished its scrutiny of the Bill and still needs to release its report, which will then be considered by the government. Other stages of debate are also likely.

The government previously indicated that the Bill may not pass until 2028 but Pennycook has now said it is important to get the reforms right.

He highlighted that it took 29 years from 1896 to 1925 to put the modern leasehold system in place, adding: “This Labour government is going to bring the leasehold system to an end in just five.”

He has rejected claims that the government is dragging its feet though. He said: “We will do what is necessary to dismantle this archaic and iniquitous system; deliver a fair and efficient modern residential property market; and, most importantly, transform the experience of homeownership for millions of leaseholders across the country.

“Not overnight. Not in a single piece of legislation. Not recklessly. But decisively, and for good.”