Leasehold Reform: What Flat Landlords Need to Know

If you own a leasehold flat as a buy-to-let, the reform agenda is moving faster than many landlords realise.

The government published the draft Commonhold and Leasehold Reform Bill in January 2026. Parliamentary scrutiny is under way. A consultation closes in less than two weeks. None of this means changes are imminent. But the direction of travel is clear, and several of the proposals will affect the value of your asset and your costs as a landlord when they do arrive.

Below is a breakdown of what has been proposed, what is confirmed versus what is still working through Parliament, and what flat landlords should be doing now.

What Is Leasehold Reform and Where Does It Stand?

Leasehold is the dominant form of flat ownership in England and Wales. When you buy a leasehold flat, you own it for a set term, typically 99 or 125 years when new, with the freehold interest owned separately. Over time that means ground rents, service charges controlled by a freeholder or managing agent, and a lease that gradually shortens.

The Leasehold and Freehold Reform Act 2024 made some changes. The government decided those changes did not go far enough, and in January 2026 published a full draft bill proposing a much more fundamental overhaul.

Published on 27 January 2026, the draft Commonhold and Leasehold Reform Bill is currently undergoing pre-legislative scrutiny. The Housing, Communities and Local Government Committee ran evidence sessions from early March through to 24 March 2026 and will publish its findings later in spring. The bill has not yet been formally introduced to Parliament. That step comes after the committee reports and the government responds.

On timing: realistic estimates put formal introduction later in 2026 and Royal Assent at no earlier than late 2026 or into 2027. For the most significant measures, particularly the ground rent cap, implementation is expected in late 2028 at the earliest, subject to parliamentary approval.

Running alongside the bill is a consultation on banning leasehold for new flats. It closes on 24 April 2026. If you have views on how the transition to commonhold should work, that is your window.

Ground Rent: What Is Changing

Ground rent is an annual charge paid by leaseholders to the freeholder. For many older leases, it is not fixed. Some ground rents are set to double every ten to twenty-five years, compounding the cost significantly and making certain properties unmortgageable as buyers' lenders refuse to lend against them.

The government's proposal in the draft bill is clear: ground rents will be capped at £250 per year. After 40 years, the cap reduces to a peppercorn, meaning effectively zero. The government estimates that between 770,000 and 900,000 leaseholders currently pay over £250 per year in ground rent. The cap is expected to come into force in late 2028, subject to parliamentary approval.

For buy-to-let landlords this matters in two ways. First, if your flat carries a high or escalating ground rent, you are paying a cost that eats into your net yield today. Second, when you come to sell, a high ground rent is a red flag for buyers and their mortgage lenders. A cap at £250 removes the escalation risk for future owners, but that benefit is two or more years away. Until then, your lease remains subject to whatever the current terms say.

One distinction worth making: the Leasehold Reform (Ground Rent) Act 2022 already abolished ground rents for new leases granted from 30 June 2022. If you bought a new-build flat after that date, your ground rent is already at peppercorn. The proposed £250 cap in the draft bill applies to existing leases granted before 30 June 2022.

Commonhold: The Proposed Default Tenure

Commonhold is a form of flat ownership where you own the individual unit as a freehold interest. The building and common areas are managed collectively by the flat owners, typically through a residents' management company. There is no freeholder, no ground rent, and no lease ticking down.

The draft bill proposes making commonhold the default tenure for new-build flats. Once the legislation comes into force, developers would not be able to grant new leasehold interests for most flats.

For existing leaseholders, the bill proposes a conversion route. Under current law, converting a block from leasehold to commonhold requires the unanimous agreement of everyone with an interest in the property, including the freeholder, any mortgage lenders, and every single leaseholder. In practice, this makes conversion almost impossible.

The draft bill would reduce the threshold to 50% of qualifying leaseholders. That is a significant change. A majority decision rather than unanimous consent means conversion becomes genuinely achievable.

For buy-to-let landlords, commonhold is not automatically better or worse as a tenure. It removes ground rent and the freeholder relationship. It means you become part of the management structure, either directly or through the residents' management company. Service charges remain. The question of who manages the building and how well they do it does not disappear, it just shifts from a freeholder to the leaseholders collectively.

Service Charges and Forfeiture

Service charges cover the maintenance and management costs of the building: cleaning, insurance, repairs, major works. These are already a significant and sometimes unpredictable cost for flat landlords.

The draft bill proposes greater transparency. Leaseholders will gain enhanced rights to detailed accounts, a stronger right to challenge costs, and better protections against excessive management fees. The detail is still being worked through as part of the scrutiny process.

On forfeiture, the proposed change is more fundamental. Forfeiture is the mechanism by which a freeholder can potentially repossess a leasehold property if the leaseholder breaches the lease, including by falling behind on service charges. In practice, courts rarely allow it to be used as an extreme remedy. But its existence as a threat has long been criticised, particularly where tenants in the property face disruption because of a landlord's dispute with the freeholder.

The draft bill proposes abolishing forfeiture entirely and replacing it with a proportionate enforcement scheme that includes judicial oversight and better protections for leaseholders.

For landlords, forfeiture is rarely a day-to-day concern. But its abolition removes a legal risk that, in extreme situations, could affect your property's mortgageability.

Lease Extension: What Flat Landlords Should Do Now

This is the most time-sensitive issue for flat landlords. Under current rules, if your lease falls below 80 years, the cost of extending it increases sharply because of something called marriage value.

Marriage value is the extra premium charged when a short-lease property is worth significantly more once the lease has been extended. If the combined value of the leasehold and freehold interests together exceeds their separate values, the leaseholder must pay 50% of that uplift to the freeholder. Below 80 years, the numbers can be substantial.

The Leasehold and Freehold Reform Act 2024 included provisions to abolish marriage value. Those provisions have not yet been brought into force. Secondary legislation is required to commence them, and as of April 2026 this has not happened. The current rules still apply.

This point is worth being direct about. If your leasehold flat is approaching 80 years on the lease, you cannot rely on the 2024 Act to protect you. Waiting for those provisions to kick in, or waiting for the draft 2026 bill to become law, is not a strategy.

Under the Leasehold Reform, Housing and Urban Development Act 1993, qualifying leaseholders have the statutory right to extend by 90 years at a peppercorn ground rent. To use this right, you need to have owned the flat for at least two years. The premium rises as the lease shortens, and the jump below 80 years is significant.

If your lease is below 90 years, get a premium estimate from a leasehold solicitor. LEASE, the Leasehold Advisory Service, provides free initial guidance and an online calculator at lease.org.uk.

What the Consultation Means for Landlords

The consultation closing 24 April 2026 focuses on banning leasehold for new flats and the specifics of how the transition to commonhold would work: the scope of the ban, any exemptions, and the proposed timeline.

If you own leasehold flats as buy-to-lets, your perspective is relevant input. The government is also considering how the 50% conversion threshold would operate in buildings where some units are investor-owned and others are owner-occupied. Investor-owned and owner-occupied units can have different priorities around management and costs, and that is a practical tension the bill will need to address.

The consultation is available via GOV.UK. Search for "Moving to commonhold: banning leasehold for new flats" to find the response form.

Practical Checklist for Flat Landlords

Check your lease length. If you do not know how many years remain on your lease, find out now. Your lease document shows the original term and start date. Anything below 90 years warrants a conversation with a solicitor. Below 80 years, act quickly.

Check your ground rent terms. Look at your lease for the ground rent clause. Is it fixed or does it escalate? If it doubles periodically, that erodes your net yield and will affect resale value. Model the impact on your returns using current figures, not projected post-reform figures.

Get a lease extension estimate if you are near the 80-year mark. Contact a leasehold solicitor or use LEASE's guidance. The cost of waiting grows disproportionately the closer you get to 80 years.

Track the bill's progress. The HCLG Committee will report in spring 2026. After that, the government formally introduces the bill. Watch for when it hits Parliament, because that sets the timeline for when the ground rent cap and forfeiture changes become firm law.

Factor reform into your exit planning. Leasehold reform changes the calculation for selling a short-lease flat. A cap on ground rent improves buyer appetite. A reformed extension regime reduces a barrier to sale. If you are weighing whether to hold or sell, factor in what the landscape looks like once the reforms land. For a fuller analysis of that decision, see our guide on when a buy-to-let stops being worth keeping.

If you hold via a limited company, the same leasehold issues apply. The company owns the flat, not you personally, but the lease length and ground rent terms are still properties of the asset. For context on the structure decision separately, see our guide to incorporating a buy-to-let in 2026.

This article is for informational purposes only and does not constitute financial or investment advice. Tax rules and legislation change frequently. Always verify current rates with HMRC or GOV.UK and seek independent professional advice before making investment decisions. Leasehold law is complex and the proposals described are subject to parliamentary approval. Always seek independent legal advice before making decisions about lease extensions or property transactions.