Leasehold reform: commonhold, ground rent and service charge changes ahead

The UK Government plans to reform the leasehold system further. Mia Rotaru, NRLA Policy and Public Affairs Officer, examines recent announcements, including adjustments to ground rents, the future of commonhold, and increased protections for leaseholders.  

With the Leasehold and Freehold Reform Act 2024 still being rolled out, in January, the Ministry of Housing, Communities and Local Government (MHCLG) released a draft Commonhold and Leasehold Reform Bill.

The Bill is aimed at making commonhold the standard for new flats, ending the sale of new leasehold flats. A ban could start in 2029, with a process to convert existing buildings – see comment *.  

It would also limit ground rents to initially £250 per annum, reducing to a peppercorn.

The Housing, Communities and Local Government (HCLG) select committee acknowledged that although the Bill makes substantial progress in strengthening leaseholders' rights, the Government needs to act more quickly and decisively. While reforms are underway, they should be more comprehensive and implemented more quickly.  

The Commonhold and Leasehold Reform Bill was a key part of the housing policies mentioned in the King’s speech in May. Following the HCLG Committee's recommendations, the Bill is expected to be submitted to Parliament in autumn 2026. 

Further leasehold reforms expected in 2027

Measures to increase transparency regarding service charges and to protect leaseholders are also on their way. These updates are intended to provide leaseholders with better insight into their expenses and to simplify the process of contesting any unfair or unclear charges: 

• New measures will require clearer information on building conditions, planned works, service charge costs and maintenance records. The reforms will also seek to reduce the burden of legal costs in disputes and provide leaseholders with more effective ways to challenge what they may perceive as unreasonable charges

• Following its response to the "Strengthening leaseholder protections over charges and services" consultation, the Government confirmed that it will bring forward regulations in England and Wales as soon as possible, with changes expected in 2027. 

Government seeks views on leasehold costs

The Leasehold and Freehold Reform Act 2024 contains some drafting issues that the Government plans to address in the new Commonhold and Leasehold Reform Bill.

• The Leasehold and Freehold Reform Act 2024 seeks to make enfranchisement easier by eliminating the two-year ownership requirement, enabling 990-year lease extensions without ground rent, and reforming valuation methods to reduce costs. Some technical issues with the Act require further legislation to resolve. The Government intends to address this through the upcoming Commonhold and Leasehold Reform Bill and is consulting on valuation rates to streamline the process.  

• Simultaneously, it launched another consultation was to shield leaseholders from excessive legal expenses. This consultation looks at existing legal and administrative costs incurred during lease extensions or freehold purchases. It also invites opinions on the Government's proposals regarding who should bear these costs under the Leasehold and Freehold Reform Act 2024, including whether certain third parties should be excluded from the new regulations.  

Both consultations will close on 23 September, and if you are a leaseholder or freeholder, the Government welcomes your view on this matter.   

The NRLA will track the progress of the upcoming legislation and provide you with relevant updates.