The government published the draft Commonhold and Leasehold Reform Bill on 27 January 2026, and it went into pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee the following month. If it passes broadly as drafted, it changes the economics of leasehold blocks in three separate ways. It is a draft Bill, not law, and that distinction matters for anyone pricing a block right now.
What the draft Bill would actually do
Three measures matter most to investors. Ground rents on existing leases would be capped at £250 a year, falling to a peppercorn after 40 years. Forfeiture, the mechanism by which a freeholder can ultimately take back a lease over a relatively small debt, would be abolished and replaced with what the government describes as a more proportionate enforcement scheme. And leasehold would be banned for new flats, with commonhold becoming the default.
The Commonhold White Paper sets out the new model, built on most of the Law Commission’s 2020 recommendations. Commonhold gives flat owners freehold title to their unit plus shared ownership of the common parts through an association, removing the ground landlord from the structure entirely.
Where it actually stands, in status terms
This is a draft Bill. Pre-legislative scrutiny began in February 2026 and has since concluded, with the Committee pressing the government to go further and faster. The substantive Bill has not yet been introduced, has not passed either House, and has no commencement dates.
It also does not start from nothing. The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024, but its ban on granting new long leases on houses has not been commenced and remains prospective, with no commencement date set. It is passed, not yet in force. The ground rent cap and the abolition of forfeiture were sought for that Act, dropped from it, and are only now being delivered through this new draft Bill. Parts of the 2024 Act do affect valuations today, notably the removal of the two-year ownership rule for enfranchisement from January 2025 and the Right to Manage changes from March 2025.
The ban on new leasehold flats is drafted into the same Bill at the same stage, but its parameters are not. The date it would take effect, the exemptions and the transitional arrangements are absent from the Bill text, and were instead the subject of a separate consultation that closed in April 2026. So the direction is clear and the timing genuinely is not.
Treat any commentary that describes ground rent caps or a leasehold ban as settled with real suspicion. It is government policy in draft form, which is a meaningful signal about direction and no guarantee of detail or date.
What it does to freehold value
The ground rent cap is the measure with the most direct effect on price. A freehold interest in a block is valued substantially on its ground rent income stream. Capping that at £250 a year, then reducing it to a peppercorn after 40 years, removes most of that value where rents currently sit above the cap.
Anyone buying a freehold reversion, or a block where the freehold is part of the deal, is buying into an income stream the government has published a draft Bill to curtail. That is not a reason to avoid the asset. It is a reason to price it on the assumption the cap arrives, rather than on the current passing ground rent, and to be sceptical of a vendor valuing it on the latter.
Abolishing forfeiture cuts the other way. It removes a freeholder’s ultimate enforcement lever over unpaid service charges and ground rent, which weakens recovery on badly performing blocks.
What this means for property investors
Price freehold reversions for the cap, not the passing rent. If a vendor is capitalising ground rent income at current levels over a long horizon, they are pricing an income the draft Bill would cut. The gap between those two valuations is the negotiation.
For leasehold flats, the reform is mostly good news you should not overpay for. Shorter leases and onerous ground rents have long carried a discount. Some of that discount may unwind if the Bill passes, but it has not passed. Buy at today’s evidence, not at the post-reform valuation a seller would like you to accept.
Check the ground rent structure before anything else on a leasehold purchase. Doubling ground rents and anything above £250 a year are the clauses most exposed to change, and they are also the ones most likely to cause a lender problem today. Our note on portfolio stock and blocks covers where these structures usually surface.
Commonhold is not yet a thing you can buy in volume. The government’s own guide puts it at fewer than 20 commonholds, comprising fewer than 200 units, created since 2002. Anyone marketing commonhold as an available alternative today is ahead of the framework, which is precisely what the Bill is intended to fix.
Watch the Bill, not the headlines. The things to track are whether it is introduced as a Bill, what pre-legislative scrutiny changes, and what the consultation concludes on timing for the new-flat ban. Each of those can move the commercial answer.
If you are weighing a block or a freehold reversion in the middle of this, it pays to look at stock that has been assessed with the reform in mind. Browse our current listings or join the insider list for deals before they are advertised.