Mark Chick, Senior Partner, Bishop & Sewell
The Government introduced its draft Commonhold and Leasehold Reform Bill (CLRB) to Parliament in late January, signalling a significant moment for leasehold reform.
Is the draft Bill historic? Yes. Is there scope for change within it? Most definitely yes.
The cap on ground rents
The most headline-grabbing change in the Bill is the capping of ground rent at a maximum of £250, changing to a peppercorn after 40 years – so effectively abolition. Once passed into law, nearly 1 million leaseholders will see their ground rent reduced and nearly 5 million will know their ground rent will never go above £250.
The policy objective is to be welcomed, but the Bill focuses on what it terms ‘unaffordable’ ground rents. However, the £250 cap is a cost that is, arguably, modest for a private property owner.
There is also discussion around the extent to which this represents a shift in value – clearly there will be a significant transfer of value from freeholders to leaseholders.
Last year, a group of freeholders applied for Judicial Review against the Leasehold and Freehold Reform Act (LAFRA), on Human Rights grounds. There are likely to be further challenges to the ground rent cap which could be quite drawn out.
Enfranchised blocks
There are situations where leaseholders have enfranchised their block and have purchased shares in reversions where there are higher ground rents paid by non-participants.
Funds have been deployed by them to buy out these interests. The proposed cap will prevent these people from recovering funds that they would have otherwise been paid, and there is an argument that there should be an exemption for such cases.
How should these reforms be implemented?
The move from leasehold tenure to commonhold should be fairly simple for new builds, but it is potentially much more complex for existing leaseholds.
The CLRB does not contain a specific conversion mechanism to move from leasehold to commonhold, instead it uses the existing collective enfranchisement model as the means to achieve this.
A drawback to this approach, is the potential for collectives to ‘rest’ once they have purchased their freehold, rather than taking the additional step and moving on to commonhold. There is currently debate around how the conversion mechanism and the post completion right to participate will be valued, amid concern that post implementation there is inequality between participants who have paid full value and those joining in later.
To understand how these will work the government should ‘come clean’ with its proposals to reform LAFRA and the valuation mechanism, as the CLRB will rely on this for these rights.
What about timing?
While the draft CLRB could be on the statute books within 18 months, full implementation requires LAFRA to be ready, which could take some time.
With the ban on new leasehold flats, the implementation and commencement of commonhold could take 3-4 years, assuming no delays to LAFRA implementation and no legal challenges to the CLRB (which is unlikely). Therefore, an outright ban on the sale of new leasehold flats in my view may take at least 7-10 years.
Time to get ready
For a smooth implementation, the entire property industry must be ready – which will take time, and the delays to date in the implementation of LAFRA have already created market uncertainty.
In my view, to ensure its success commonhold should be mandated first for new build developments, to allow lenders, the market and the conveyancing profession time to adapt. Developers are likely to have the resource to ensure that the new tenure is workshopped properly and becomes the success that the government hopes it will.
The new draft Bill is certainly historic. However, we have a long way to go before it is fully implemented.
Mark Chick is Senior Partner at Bishop & Sewell and joint head of the Landlord & Tenant team. He is a director of ALEP, the Association of Leasehold Enfranchisement Practitioners.
If you have a query concerning leasehold property, then please contact the experts at Bishop & Sewell’s Landlord & Tenant team by emailing [email protected] or calling 020 7631 4141.
The above is accurate as at 12 March 2026. The information above may be subject to change. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis
