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. That scrutiny has concluded, and on 29 September 2026 the Prime Minister said a Bill for leasehold reform would be introduced before Christmas. 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.
In short
- The draft Bill would cap ground rents on existing leases at £250 a year, then a peppercorn after 40 years.
- It would also abolish forfeiture and make commonhold the default for new flats.
- It is a draft Bill: not yet introduced, not passed by either House, and with no commencement dates.
- Price freehold reversions on the assumption the cap arrives, not on the current passing ground rent.
- Fewer than 20 commonholds, with fewer than 200 units between them, have been created since 2002.
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 the leasehold reform Bill stands
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 King’s Speech on 13 May 2026 confirmed the government will bring the Bill forward. At the last check in September 2026 the substantive Bill had not been introduced, had not passed either House, and had no commencement dates. In his Labour conference speech on 29 September 2026, the Prime Minister, Andy Burnham, said: “We will introduce a Bill before Christmas for long overdue Leasehold Reform.” He did not name the Bill or say what it would contain. Until it is formally introduced in Parliament, that is a promise about timing, not a change in status.
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.
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 is not.
Caution: 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 expect that basis to be the substance of the negotiation.
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 rather than at a post-reform valuation, whichever side is proposing it.
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, and our guides to the Building Safety Act for block buyers and to pricing short lease flats cover two other risks that commonly sit alongside leasehold blocks.
Commonhold is not yet available to 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, how the government responds to the Committee’s recommendations, and what the consultation concludes on timing for the new-flat ban. Each of those can move the commercial answer.
If you own a block or a freehold and are weighing up selling, get a free desktop valuation: an evidence-backed range within 24 hours, yours whether you sell or not.
If you are weighing a block or a freehold reversion in the middle of this, check the ground rent terms before you price it. Browse our current listings or join the insider list for deals before they are advertised.
BlackBook Investments is a property investment broker, not a mortgage, tax or investment adviser. Nothing here is a recommendation on any product or on your position. Take regulated advice before acting.