Ground rent cap and other key changes in the commonhold and leasehold reform bill

The draft Commonhold and Leasehold Reform Bill was published on 27 January 2026 and seeks to modernise and strengthen the current commonhold and leasehold framework.

The draft Bill proposes a number of changes to the framework and how it stands today, with the key changes being:

• Ground rent to be capped at £250 per year, then after 40 years, this cap will be reduced to a ‘peppercorn rate’, effectively banning ground rent
• Abolition of forfeiture of lease and replacing this with a fairer enforcement scheme
• Commonhold to be the default tenure for new-build flats
• The requirement to convert from leasehold to commonhold reduced from 100% to 50% of leaseholder agreement.
• A scheme will be introduced to deal with disputes over freehold rent charges

The Bill must work its way through Parliament before it becomes law, but it was a manifesto commitment of the current government which has a strong majority, so is likely to pass and landlords should start to prepare for what may be significant changes. Ground rent and forfeiture

Ground rents for most existing leasehold properties will be capped at £250 a year, reducing to a nominal amount after 40 years. Ground rents have already been banned for new leasehold properties under the Leasehold Reform (Ground Rent) Act 2022.

Around 3.8 million of the roughly 27 million homes in England and Wales are leasehold, equal to around 1 in 7 properties (14%) homes. The government estimates that as many as 900,000 leaseholders currently pay more than £250 per year in ground rent, so the new proposed rule would have a very significant impact, both for leaseholders and their landlords.

Currently, should a leaseholder default on ground rent payments, a landlord may seek to forfeit the lease and take possession of the leasehold property. The draft Bill seeks to abolish forfeiture and replace with a fairer enforcement scheme, however there is no indication as of yet as to what this scheme may look like.

How is commonhold different from leasehold?

Commonhold is an alternative to leasehold as a way of owning and managing multiple properties in a unit, such as blocks of flats.

With a leasehold, the “owners” of the individual properties buy a lease, which gives them the right to occupy the property for a fixed term but does not make them the outright or ‘freehold’ owners as they do not own the land the property sits on. Freeholders can either be third parties or the leaseholders may own the freehold collectively via a management company of which they will be shareholders.

Under commonhold, the building and the land it stands on will be owned by a commonhold association. Buyers of individual properties within the building are referred to as ‘unit owners’ and own a share of the freehold, as well as having the right to become members of the commonhold association. Only unit owners can be members of the commonhold association, removing the potential for third party landlords, although external directors can be appointed to run the association if desired.

Under a leasehold, the lease must be renewed periodically whereas with a commonhold this is not required as each unit owner owns a share of the freehold.

What do landlords need to do to prepare?

Landlords will need to review the terms of their ground rent and make sure they will be compliant with the new law. Where necessary, they will need to update lease documents to reflect the new ground rent cap when it comes into effect.

Landlords should consider initiating forfeiture proceedings for any non-payment of ground rent in order to exercise the right to forfeit prior to the potential abolishment of this remedy.

Landlords will also need to familiarise themselves with the rules for converting leaseholds to commonhold as it is likely that many leaseholders with third-party landlords will choose to exercise this right.

How Longmores can help with leasehold matters

Longmores’ Property Litigation team has extensive experience supporting leaseholders, management companies, freeholders and managing agents. We offer pragmatic legal advice and representation for all leasehold matters and property disputes, resolving your issues cost-effectively and in a way that matches your interests.

For expert support and guidance on leasehold law or a property dispute, please contact John Wagstaffe who will be happy to advise.

Please note, the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.