What Is Commonhold And Why Is The Labour Government Pushing It?

Commonhold is a freehold-based system of flat ownership that gives each owner direct title to their unit and collective control of shared areas, without a third-party landlord. The Labour Government published the draft Commonhold and Leasehold Reform Bill on 27 January 2026, which proposes to ban new leasehold flats, cap existing ground rents at £250 per year falling to a peppercorn after 40 years, and make it easier for existing leaseholders to convert by requiring 50% rather than unanimous consent. The Bill is at the pre-legislative scrutiny stage and is not yet law.

Key Points

• Commonhold is a form of freehold ownership designed for flats: each unit-holder owns their property outright and shares responsibility for common areas through a Commonhold Association, with no landlord holding a superior interest.
• The draft Commonhold and Leasehold Reform Bill, published on 27 January 2026 and confirmed for formal introduction in the current parliamentary session in the King’s Speech of May 2026, proposes to ban new leasehold flats, cap existing ground rents at £250 per year for a 40-year transitional period, and reduce the conversion threshold from unanimity to 50% of qualifying leaseholders.
• The Leasehold and Freehold Reform Act 2024 is already partially in force: from January 2025 the two-year ownership requirement for lease extension and enfranchisement claims was removed, and from March 2025 the right to manage was extended to mixed-use buildings with up to 50% non-residential floor area.
• The headline reforms in the 2026 Bill, including the ban on new leasehold flats and the ground rent cap, are not yet law; they are legislative proposals subject to parliamentary scrutiny and further commencement regulations before they take effect.
• Existing leaseholders in Nottingham and across England should seek legal advice before assuming any current rights have changed, since the most significant provisions of both the 2024 Act and the 2026 Bill remain prospective.

Commonhold gives flat owners freehold title to their individual unit and joint responsibility for shared parts of the building through a company called the Commonhold Association. There is no landlord in the traditional sense and no lease that diminishes in value over time. England and Wales are among the last jurisdictions in the developed world to rely predominantly on leasehold for flat ownership, and that position is now under sustained legislative pressure.

The push for reform has been building for years. Extortionate ground rent escalation clauses, the Grenfell Tower tragedy, and the subsequent cladding crisis exposed deep structural problems with the leasehold system. According to government statistics published in May 2026, there were approximately 4.9 million leasehold dwellings in England in 2024-25, of which 3.38 million were flats. The scale of the problem has made reform a political priority for both main parties, and the Labour Government has moved from White Paper to primary legislation within twelve months.

What the Law Already Changed: the Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024, but most of its substantive provisions are not yet in force. Two sets of commencement regulations have been made so far.

From 31 January 2025, section 27 came into force, abolishing the two-year ownership requirement. Before that change, a leaseholder had to have owned their property for at least two years before they could apply to extend their lease or join a collective enfranchisement claim under the Leasehold Reform, Housing and Urban Development Act 1993. That barrier no longer exists for anyone who has registered as proprietor of their lease.

From 3 March 2025, sections 49 to 52 came into force, expanding and reforming the right to manage. The non-residential floor area threshold for right-to-manage claims rose from 25% to 50%, bringing a large number of mixed-use buildings within scope for the first time. The cost regime also changed: right-to-manage companies no longer automatically bear the landlord’s legal costs of the claim process, a shift that substantially reduces the financial risk of pursuing management control.

The headline reforms that leaseholders are most waiting for, including the removal of marriage value from lease extension premiums, 990-year statutory lease extensions, and the simplified collective enfranchisement process, remain prospective. They await further commencement regulations, a timetable that the Government has not yet confirmed.

What the 2026 Bill Proposes

The draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, goes considerably further than the 2024 Act. It completed pre-legislative scrutiny before the Housing, Communities and Local Government Committee in spring 2026, and the King’s Speech of 13 May 2026 confirmed it will be introduced as a formal Bill in the current parliamentary session. Specific provisions may still change materially as it progresses.

The Bill’s central proposal is a ban on granting or selling new long residential leases (those exceeding 21 years) of flats. Build to Rent, social rented housing, and student accommodation would fall outside the ban while used exclusively for rent. Some limited categories of lease, including shared ownership and certain home finance plan arrangements, would be permitted. The commencement date for the ban has not been fixed in the draft: the Government has confirmed it will come into force only once the reformed commonhold framework is fully operational and the market has had time to adapt. Industry commentary suggests a date no earlier than 2029 is realistic.

For existing leaseholders, the most immediate practical change in the Bill concerns ground rent. The Leasehold Reform (Ground Rent) Act 2022 abolished ground rent for new residential leases granted on or after 30 June 2022. The 2026 Bill extends that logic backwards: for regulated leases already in existence, ground rent would be capped at £250 per year from the date the measure commences, then reduced to a peppercorn after a 40-year transitional period. No compensation to landlords is proposed for the lost income.

The Bill also proposes to abolish forfeiture for long residential leases. Rather than a landlord being able to terminate a lease unilaterally for breach of covenant, the new regime would require a court application for a “lease enforcement claim”, with the court ordering remediation or, in serious cases, an order for sale. This does not represent a dramatic change in day-to-day practice, since forfeiture of long residential leases is rarely pursued in court, but its removal matters symbolically and will protect leaseholders from disproportionate threats of termination for relatively minor arrears.

Conversion of existing leasehold blocks to commonhold has historically required unanimous consent from all leaseholders, their mortgage lenders, and the freeholder: a threshold so high that conversion was near-impossible in practice. The Bill proposes replacing that unanimity requirement with a 50% threshold of qualifying leaseholders. A related consultation on banning leasehold for new flats closed on 24 April 2026.

What Commonhold Would Look Like in Practice

Suppose a Nottingham flat owner in a ten-unit block currently pays £300 per year in ground rent under a lease with 85 years remaining. Under the Bill, once the ground rent cap commences, their annual ground rent obligation would fall to £250 immediately and to nothing after 40 years. If 50% of the qualifying leaseholders in the block agreed to convert to commonhold, the building could transition: each owner would hold the freehold of their own unit and become a member of the Commonhold Association responsible for managing the shared stairwells, roof, and structure. The association would operate under a Commonhold Community Statement, setting out the rights and obligations of all unit holders.

Under the reformed framework in the Bill, each commonhold must have at least two directors, a mandatory reserve fund informed by a professional study, and agreed annual budgets. The concept of “sections” allows mixed-use buildings to separate the governance of commercial and residential parts, addressing one of the practical objections that dogged the Commonhold and Leasehold Reform Act 2002 when it first introduced commonhold with negligible take-up.

For flat owners in Arnold or elsewhere in Nottinghamshire considering whether to extend their lease, pursue collective enfranchisement, or wait for the Bill’s conversion regime, the central point to understand is that the reforms are not yet in force. The 2024 Act’s most valuable provisions remain prospective; the 2026 Bill has not yet passed into law. Decisions taken now operate under the existing law, and the costs and premiums calculated under that law may look very different once the reform timetable becomes clearer. Taking specialist advice before making commitments is the only prudent course. Our residential conveyancing and commercial property teams can advise on the current position and how prospective changes may affect your specific situation.

Frequently Asked Questions

Is commonhold available to buy now?

Yes, technically, but it is extremely rare. The Commonhold and Leasehold Reform Act 2002 introduced commonhold over two decades ago, and fewer than 20 commonhold developments have been established in England and Wales since then. The reformed framework under the 2026 Bill does not yet exist, so any new commonhold today operates under the 2002 regime, which has well-documented limitations.

When will new leasehold flats be banned?

No commencement date has been fixed. The Government has said the ban will come into force only once the reformed commonhold framework is fully in operation and the market has had time to adjust; industry estimates point to no earlier than 2029. As of June 2026 the Bill has completed pre-legislative scrutiny and was confirmed for formal introduction in the current parliamentary session, but it has not yet been enacted, so the ban is not imminent.

Will my existing ground rent be capped automatically?

No, not automatically and not yet. The £250 cap proposed in the Bill will apply only once the relevant provisions are commenced by statutory instrument. If and when that happens, it will apply to ground rents falling due after that date under existing long residential leases of single dwellings granted for a premium. Landlords will not be required to refund past ground rent payments already made.

Does the 50% conversion threshold apply today?

No. Today, converting a leasehold building to commonhold still requires the unanimous consent of all qualifying leaseholders, their mortgage lenders, and the freeholder under the 2002 Act. The 50% threshold is a proposal in the draft 2026 Bill and has not yet been enacted.

How does commonhold affect mortgage lending?

The 2026 Bill addresses lender protections directly, including requirements for the Commonhold Association to notify lenders when debt reaches a trigger level for enforcement, and provisions allowing lenders to apply to court during insolvency proceedings. Mortgage lenders will need to update their lending criteria once the framework is passed, but many major lenders are already reviewing their approach to commonhold in anticipation of the Bill becoming law.

About the Author

This article was written by Kuljeet Sandhu, Sandhu (SRA number
(416477) Director, Senior Solicitor and Notary Public at Smalleys Solicitors and a founding partner of Askews Legal LLP. Kuljeet has over ten years’ experience in commercial litigation and commercial transactional work. His practice covers commercial leases, dilapidations, forfeiture and lease renewal under the Landlord and Tenant Act 1954, restrictive covenants, easements, adverse possession, and shareholder and director disputes. He has acted on multi-track disputes in the High Court including the Chancery Division. Smalleys Solicitors is regulated by the Solicitors Regulation Authority under SRA number 639164.