Is this the end of leasehold flats?

Spring 2026 is set to be a busy time for property owners as the government proposes major changes which, if they come into effect, would transform the property landscape in England and Wales.

Draft Commonhold and Leasehold Reform Bill

The draft Commonhold and Leasehold Reform Bill was published in January 2026 for pre-legislative scrutiny by parliament.

Amongst other things, the draft bill proposes;

• a complete ban on the use of leasehold ownership for virtually all new flats. Instead, commonhold would become the default way to own a flat. Commonhold is a type of freehold ownership which gives individual unit owners outright ownership of their homes and shared ownership of communal areas through a commonhold association — a model widely used in other countries, such as Australia
• to make it easier for existing leaseholders to convert to commonhold
• to cap ground rents for existing leasehold properties at £250 per year with a long-term plan to reduce these to a nominal “peppercorn” level over the next 40 years. The creation of new ground rents in leasehold properties has already been banned, and the proposed new cap on ground rent for existing leaseholders is expected to affect a significant number of existing leaseholders and landlords
• to get rid of forfeiture provisions in leases, replacing them with a new enforcement regime that will rebalance the system and make it fairer between landlord and leaseholder.

At the same time, the government has launched a consultation on the proposal to ban the creation of new leasehold flats, with interested parties invited to comment before the consultation closes on 24 April 2026.

What could it mean for the property market?

If adopted, this proposed ban and the accompanying associated changes would radically change flat ownership in England and Wales and lead to commonhold ownership becoming the ‘norm’ for flats, rather than the ownership of leasehold flats.

Developers would need to adopt commonhold as the default tenure for new build flats.

Flat buyers could benefit from clearer rights and more control over building management and could find it easier to sell their properties.

Tenants of existing flats may also find it easier to transition to commonhold if they wish to do so.

There will likely be concern from professional freeholders, and initial responses from the British Property Federation and the Residential Freehold Association expressed concerns that the proposed cap on ground rents could adversely affect investments made by property investors and pension funds.

There is no doubt that such major changes will need extensive consultation and phasing to allow the property market to adapt to the changes. If the residential flat market is to transition from leasehold to commonhold, tenants, landlords, investors, property professionals and lenders will all need time to consider and digest the proposed changes and put new processes in place.