{"id":1130145,"date":"2026-02-02T12:28:11","date_gmt":"2026-02-02T12:28:11","guid":{"rendered":"https:\/\/tppuk.com\/?p=1130145"},"modified":"2026-02-02T12:28:13","modified_gmt":"2026-02-02T12:28:13","slug":"leasehold-and-commonhold-reform-bill","status":"publish","type":"post","link":"https:\/\/tppuk.com\/cy\/sales\/leasehold-and-commonhold-reform-bill\/","title":{"rendered":"Proposed Changes to Ground Rent under Draft Commonhold and Leasehold Reform Bill"},"content":{"rendered":"<p>If you own a leasehold property &#8211; or are thinking of buying one &#8211; significant changes could be on the horizon.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"750\" height=\"375\" src=\"https:\/\/tppuk.com\/wp-content\/uploads\/leasehold-and-commonhold-reform-bill_-ST.jpg\" alt=\"leasehold and commonhold reform bill\" class=\"wp-image-1130147\" srcset=\"https:\/\/tppuk.com\/wp-content\/uploads\/leasehold-and-commonhold-reform-bill_-ST.jpg 750w, https:\/\/tppuk.com\/wp-content\/uploads\/leasehold-and-commonhold-reform-bill_-ST-18x9.jpg 18w\" sizes=\"(max-width: 750px) 100vw, 750px\" \/><\/figure>\n\n\n\n<p>The UK Government has published the <a href=\"https:\/\/www.gov.uk\/government\/publications\/draft-commonhold-and-leasehold-reform-bill\" target=\"_blank\" rel=\"noreferrer noopener\">Draft Commonhold and Leasehold Reform Bill<\/a>, which proposes to transform how flats are owned in England and Wales. This guide explores what these changes could mean in the future for leaseholders, covering the new Ground Rent cap and the potential shift towards commonhold ownership.<\/p>\n\n\n\n<p>At the outset, it\u2019s worth stating that the measures in this Bill are likely to undergo significant change and modification as it moves through Parliament.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Ground Rent: what changes are planned?<\/h2>\n\n\n\n<p>Ground Rent is an annual charge that residential leaseholders must pay Ground Rent to their freeholder under their lease agreement. Unlike service charges, which pay for things like building maintenance and communal cleaning, <a href=\"https:\/\/www.bbc.co.uk\/news\/articles\/cd0ypn29yg8o\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Ground Rent<\/a> doesn&#8217;t entitle leaseholders to any service in return. It&#8217;s simply a payment required under the terms of the lease.<\/p>\n\n\n\n<p>There are roughly 3.8 million leasehold flats and houses with a Ground Rent obligation across England and Wales. Ground Rents vary massively: some are just a token amount (called a &#8216;peppercorn&#8217;), whilst others can exceed \u00a31,000 per year. Some leases include clauses that allow Ground Rents to increase over time, sometimes doubling every 10 or 20 years, which can create serious problems for homeowners.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The new \u00a3250 cap for ground rent explained<\/h3>\n\n\n\n<p>Building on previous legislation, the Government plans to reform Ground Rent for older leases by introducing a cap of \u00a3250 per year. The Ground Rent Act 2022 already banned Ground Rents on new leases, but existing leaseholders have continued paying under their original terms until now.<\/p>\n\n\n\n<p>This means that if a person currently pays more than \u00a3250 per year in Ground Rent, their payments could be reduced to \u00a3250 if the new rules are agreed.<\/p>\n\n\n\n<p>The Government supposedly aims for these measures to come into force in late 2028. Between 770,000 and 900,000 leaseholders currently pay more than \u00a3250 per year and will benefit immediately from this cap.<\/p>\n\n\n\n<p>But, as this is all part of a Draft Bill \u2013 none of this is fully guaranteed just yet. So you\u2019ll need to keep an eye on the situation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Why \u00a3250 ground rent cap?<\/h3>\n\n\n\n<p>The \u00a3250 figure wasn&#8217;t chosen randomly. Ground Rents above \u00a3250 (or 0.1% of property value) commonly trigger additional checks from mortgage lenders.<\/p>\n\n\n\n<p>Some lenders won&#8217;t offer mortgages at all on properties with high Ground Rents, whilst others impose extra requirements that can delay or derail property sales. By capping ground rent at \u00a3250, the Government aims to remove these barriers, making it easier for leaseholders to sell their leasehold property and access competitive mortgage rates.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Ground rent will eventually become a peppercorn<\/h3>\n\n\n\n<p>After 40 years, the plan is that the cap will change from \u00a3250 to a \u2018peppercorn\u2019, meaning Ground Rent will effectively become zero. The Government&#8217;s long-term aim is to eliminate Ground Rents entirely, bringing older leases into line with new leases created after the Ground Rent Act 2022 came into force.<\/p>\n\n\n\n<p>The 40 years transition period was chosen to balance the interests of leaseholders with those of freeholders and investors who have existing financial arrangements based on ground rent income. The Government estimates that existing leaseholders could save between \u00a310 billion and \u00a312.7 billion in total when assessed over the entire lifetime of their leases.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What about past Ground Rent payments?<\/h3>\n\n\n\n<p>The new rules won&#8217;t require landlords to refund any Ground Rent that leaseholders have already paid, even if it exceeded \u00a3250. The cap is only planned to apply to payments due after the new legislation comes into force.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How has the property industry reacted and what are the challenges?<\/h3>\n\n\n\n<p>Nearly everyone agrees that the <a href=\"https:\/\/hoa.org.uk\/advice\/guides-for-homeowners\/for-owners\/leasehold-reform\/\" target=\"_blank\" rel=\"noreferrer noopener\">leasehold system needs to be reformed<\/a> \u2013 including Ground Rent &#8211; but that does not mean that there\u2019s widespread support for the new Draft Bill. Much depends upon how it is rolled out, and how the government chooses to engage with the various stakeholders involved.<\/p>\n\n\n\n<p>For example, the <a href=\"https:\/\/www.conveyancers.org.uk\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Society of Licensed Conveyancers (SLC) <\/a>have expressed concerns that it could create unexpected costs and complexity for future Commonholders, commenting \u201cUnlike leasehold, commonhold places the ongoing management, financial decision making and governance of buildings directly in the hands of homeowners, many of whom will have little experience of the legal and administrative responsibilities involved.\u201d<\/p>\n\n\n\n<p>For Ground Rent and the overall Bill, much remains to be agreed upon, and then further debated in Parliament.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Draft Commonhold and Leasehold Reform Bill about?<\/h2>\n\n\n\n<p>The leasehold system has been criticised for a long time, and the new Draft Bill aims to introduce a range of measures to improve life for leaseholders and introduce a new way of owning a flat called \u2018commonhold\u2019 (building on the <a href=\"https:\/\/www.legislation.gov.uk\/id\/ukpga\/2024\/22\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Freehold Reform Act 2024<\/a>).<\/p>\n\n\n\n<p>The Government described the leasehold system as &#8216;feudal&#8217; and has committed to bringing it to an end through comprehensive leasehold reforms \u2013 at least in theory.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What is commonhold?<\/h3>\n\n\n\n<p>Commonhold is a different way of owning a flat that forms the centrepiece of the leasehold and freehold reform agenda. Instead of having a lease that runs out, people will own flats outright as a freehold.<\/p>\n\n\n\n<p>In a commonhold building, all the flat owners are members of a &#8216;commonhold association&#8217;, which is a company that collectively owns and manages the shared areas like hallways, stairs, the roof, and gardens. Neighbours make decisions together about how the building is run, what work needs doing, and how much everyone contributes to shared costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the key measures of the new Bill?<\/h2>\n\n\n\n<p>Here are the headline measures which feature in the Draft Bill. Once again, there is plenty of room for these to change as the Bill is brought before parliament and scrutinised in detail.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Banning leasehold for new flats<\/h3>\n\n\n\n<p>Once reformed, and commonhold is operational, the Draft Bill will ban leasehold for most new-build flats, requiring commonhold sales instead. The ban won&#8217;t be immediate, and the Government is consulting on timing and exceptions to ensure a smooth transition. Existing leasehold flats will be unaffected and people can still sell or extend the lease normally.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Making it easier to convert to commonhold<\/h3>\n\n\n\n<p>Currently, converting to commonhold requires 100% agreement from all leaseholders, mortgage lenders, and the freeholder. This can be virtually impossible in practice, so the Bill reduces this to agreement from 50% of leaseholders. Non-participating leaseholders can remain but become commonhold association members with voting rights.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Abolishing \u2018forfeiture\u2019<\/h3>\n\n\n\n<p>Currently, landlords can use &#8216;forfeiture&#8217; to end a lease if the leaseholder breaches the lease terms. The Bill aims to reform this practice, and to replace it with a fairer system with more proportional penalties.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. Protecting homeowners on private estates<\/h3>\n\n\n\n<p>Many freehold homeowners pay estate <a href=\"https:\/\/www.gov.uk\/guidance\/rentcharges\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">rentcharges<\/a> for maintaining shared facilities. Currently, falling 40+ days behind allows estate companies to take possession of a leasehold property. The Bill would ensure companies can only recover debts through normal channels like small claims court, but can\u2019t seize a home over small, outstanding payments.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Common Questions Answered<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1770034584314\"><strong class=\"schema-faq-question\">When will these changes happen?<\/strong> <p class=\"schema-faq-answer\">The Draft Bill is currently being reviewed and refined before being brought before Parliament. The Housing, Communities and Local Government Select Committee will examine the proposals and make recommendations. <br\/><br\/>The Government intends to bring the ground rent cap into force in late 2028, and the reformed commonhold system should be available before the end of this Parliament (in theory). The ban on new leasehold flats will only come into force once the commonhold framework is fully operational.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1770034593066\"><strong class=\"schema-faq-question\">Who would manage commonhold buildings?<\/strong> <p class=\"schema-faq-answer\">The commonhold association (made up of all the flat owners) appoints directors to manage the building. These can be owners themselves or professional managing agents. All members get to vote on the annual budget, and there are clear rules about how decisions are made. If directors aren&#8217;t doing their job properly, members can apply to have them replaced.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1770034601626\"><strong class=\"schema-faq-question\">Will there be any exemptions to the ban on new leasehold flats?<\/strong> <p class=\"schema-faq-answer\">The Government is consulting on whether any limited exemptions should apply. Purpose-built rental accommodation (like Build to Rent developments and social housing) falls outside the ban whilst it remains solely for rent, as these operate on short-term tenancies (rather than longer leases). <br\/><br\/>If any units in these buildings are later sold, the ban would apply unless an exemption covers them.<\/p> <\/div> <\/div>\n\n\n\n<h2 class=\"wp-block-heading\">What does this means moving forwards?<\/h2>\n\n\n\n<p>These leasehold reforms represent the biggest changes to flat ownership in decades. And<\/p>\n\n\n\n<p>looking ahead, commonhold could offer a fundamentally different way to own a flat \u2013 with new challenges, legal complexities, and potential opportunities for homebuyers in Wales.<\/p>\n\n\n\n<p>If you&#8217;re considering buying or selling a leasehold property, we&#8217;re here to help. Our team can guide you through the homes selling process and explain how these changes might affect your situation \u2013 <a href=\"https:\/\/tppuk.com\/cy\/contact-us\/\">get in touch with us today<\/a>.<\/p>\n\n\n\n<p><\/p>","protected":false},"excerpt":{"rendered":"<p>If you own a leasehold property &#8211; or are thinking of buying one &#8211; significant changes could be on the horizon. The<\/p>","protected":false},"author":9,"featured_media":1130146,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[91],"tags":[90],"class_list":["post-1130145","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sales","tag-vendors"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Draft Leasehold and Commonhold Reform Bill Explained - TPPUK<\/title>\n<meta name=\"description\" content=\"If you own a leasehold property, significant changes could be on the horizon under the draft Leasehold and Commonhold Reform Bill.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tppuk.com\/cy\/sales\/leasehold-and-commonhold-reform-bill\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Draft Leasehold and Commonhold Reform Bill Explained\" \/>\n<meta property=\"og:description\" content=\"If you own a leasehold property, significant changes could be on the horizon under the draft Leasehold and Commonhold Reform Bill.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/tppuk.com\/cy\/sales\/leasehold-and-commonhold-reform-bill\/\" \/>\n<meta property=\"og:site_name\" content=\"Williams &amp; Goodwin\" \/>\n<meta property=\"article:published_time\" content=\"2026-02-02T12:28:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-02-02T12:28:13+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/tppuk.com\/wp-content\/uploads\/leasehold-and-commonhold-reform-bill_-guide-ST.jpg\" \/>\n\t<meta property=\"og:image:width\" 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The Housing, Communities and Local Government Select Committee will examine the proposals and make recommendations. <br\\\/><br\\\/>The Government intends to bring the ground rent cap into force in late 2028, and the reformed commonhold system should be available before the end of this Parliament (in theory). The ban on new leasehold flats will only come into force once the commonhold framework is fully operational.\",\"inLanguage\":\"cy\"},\"inLanguage\":\"cy\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/tppuk.com\\\/sales\\\/leasehold-and-commonhold-reform-bill\\\/#faq-question-1770034593066\",\"position\":2,\"url\":\"https:\\\/\\\/tppuk.com\\\/sales\\\/leasehold-and-commonhold-reform-bill\\\/#faq-question-1770034593066\",\"name\":\"Who would manage commonhold buildings?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The commonhold association (made up of all the flat owners) appoints directors to manage the building. 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