Leasehold Reform Explained: From Bill to Law – A Leaseholder’s Guide to What’s Actually Happening

Introduction: Why Leaseholders Are Confused

If you own a leasehold flat or house in England or Wales, you’ve probably heard that leasehold reform is coming. Ground rent caps. Forfeiture abolished. Commonhold as the new default.

But here’s the problem: almost none of it is law yet.

And that’s causing real confusion. Leaseholders are asking: “Is the £250 ground rent cap in force?” “Can I extend my lease cheaper now?” The honest answer to most of these questions is “not yet”

The confusion isn’t your fault. The government is juggling two separate pieces of legislation simultaneously, some reforms are already law (but not yet implemented), some are stuck in consultation, and some are still just promises in a draft Bill. Court challenges from freeholders (on the proposed abolition of marriage value) are adding more uncertainty. And even when Parliament does pass a Bill, writing the detailed regulations that make it actually work can take years.

This article cuts through the noise. We’ll explain the current status of leasehold reform what’s actually law right now and what’s coming in the draft Bill.

Part 1: The two leasehold reform bills confusing everything

As of August 2026, the UK government is trying to implement leasehold reform through two separate pieces of legislation running in parallel. This is the root of a lot of the confusion.

Just prior to the general election, the previous Conservative government passed the Leasehold and Freehold reform act 2024 in the “wash-up” period before the 2024 general election – meaning it was rushed through without proper scrutiny

The incoming labour Government has little enthusiasm in enacting a previous governments bill so introduced its own bill, the Commonhold and Leasehold reform act 2026.

Bill 1 – The Leasehold and Freehold Reform Act 2024 (Already Law – partly)

This Act received Royal Assent on 24 May 2024. It’s officially law. But here’s the catch: most of its important provisions haven’t actually come into force yet.

Whilst Labour is committed to many aspects of the Leasehold and Freehold Reform Act 2024, much of it may never be enacted with Labour prioritising its own bill,

What IS already in force:

• The two-year residency rule is gone. As of February 2025, you no longer have to have lived in your flat for two years before you can extend your lease.
• Right to Manage eligibility has expanded for mixed-use buildings; specifically, from 3 March 2025, the non-residential internal floor area threshold for Right to Manage eligibility increased from 25% to 50%
• The ability to fund a remediation contribution order via service charges often a necessary pre-cursor to gaining a contribution for building remediation from a freeholder.
• Landlords must pay for interim safety measures and remediation – landlords can’t hide behind inaction; they must now fund waking watch patrols, evacuation alarms, and actual defect repairs, with the First-tier Tribunal able to enforce these Remediation Orders.
• Leaseholders displaced for safety reasons get rehousing costs covered by landlords – alternative accommodation costs are recoverable from landlords via Remediation Contribution Orders, plus local authorities can recover their own rehousing expenses if they step in.

What is NOT yet in force but is still likely

• 990-year lease extensions are not yet available. You can still only extend by 90 years under current law.
• Marriage value has not been abolished. When you extend your lease or buy the freehold, you still have to pay this additional valuation cost.
• Banning the grant of leases on freehold houses. Houses sold as new builds will have be sold freehold (with very limited exceptions).
• Enhanced enfranchisement rights
• Greater service charge transparency
• Insurance commission ban (permitted insurance fees)
• Legal costs rebalancing. Challenging the assumption that freeholders can claim their legal costs.

Why not? Because these changes need “secondary legislation” – detailed regulations that set out how the legislation works in practice. “Primary legislation” comes into force when an act gains Royal Ascent (as happened in this case on 24 May 2024), however, these acts of parliament are merely a framework; Secondary legislation is required to define the detail of how the law will work in practice.

As an example, the LFRA 2024 promised to abolish marriage value and introduce 990-year lease extensions. These are now law, but the proposed replacement valuation rates have not yet been determined. i.e. the “secondary legislation” has yet to be completed.

As of July 2026, the government launched the formal consultation on these rates. That consultation doesn’t close until September 2026, and setting these rates into binding regulations will take additional time. So realistically, leaseholders won’t be able to benefit from these reforms until late 2027 at the earliest – and possibly 2028.

Bill 2: The Draft Commonhold and Leasehold Reform Bill 2026 (Not Yet Law)

On 27 January 2026, the government published a draft of a completely new Bill. This is separate from the 2024 Act. The 2026 Bill proposes far more radical changes – banning new leasehold flats entirely, capping ground rents at £250 a year on existing leases, abolishing forfeiture, and reinvigorating commonhold as the default tenure for new blocks.

This Bill is a draft. It has not yet been introduced to Parliament. It is not law. It has gone through pre-legislative scrutiny (more on that below), but it still has to go through all the parliamentary stages before it can become law. And given how complex it is, that will take time.

Part 2: What’s law right Now and what’s not

Let’s be clear and practical. As of August 2026, here’s where leaseholders in England and Wales stand:

Firmly in force:

• The ban on ground rent on most new leases (from 30 June 2022 onwards). If you buy a new-build flat, ground rent shouldn’t be an issue.
• Two-year residency rule removed for lease extensions (Feb 2025).
• Better Right to Manage eligibility for mixed-use buildings.

In law but NOT yet implemented (pending secondary legislation):

• 990-year extensions
• Abolition of marriage value
• Enhanced enfranchisement costs regime
• Insurance commission ban (being replaced with “permitted insurance fees”) – consultations have closed; implementation expected 2027

Promised in the draft Bill but NOT yet law:

• Ground rent cap of £250 per year on existing leases
• Forfeiture abolition
• Commonhold as default for new flats
• Service charge benchmarking and automatic tribunal referrals
• Annual building condition reports
• Stronger controls on litigation costs passed to leaseholders

This distinction matters enormously. If you’re a leaseholder thinking about extending your lease in September 2026, the rules are still the old ones.

Part 3: Understanding the 2026 Draft Bill – What It Proposes

The draft Commonhold and Leasehold Reform Bill 2026 is the government’s attempt to fundamentally reform the leasehold system. Here are the key proposals:

A. Banning New Leasehold Flats

The Bill would make commonhold the default tenure for new blocks of flats. Developers would no longer be able to sell new long leasehold flats – they’d have to convert to commonhold instead.

Some see this as a radical move but, in reality, it would just bring us in line with pretty much the rest of the world. It doesn’t apply retrospectively, so all the existing leasehold buildings out there stay leasehold. But it signals the end of the leasehold model for new construction.

1. Ground Rent Cap of £250 a Year

For existing leases, the Bill proposes capping ground rent at £250 per annum, reducing to a peppercorn (effectively zero) after 40 years. This would be a massive relief for leaseholders currently paying escalating ground rents of hundreds or thousands of pounds annually.

However, the Bill is not yet law, and even once it is, the regulations needed to implement it will take time. The government initially said the cap would come into force in late 2028, though there have been hints it might be earlier.

B. Abolishing Forfeiture

Currently, a landlord can theoretically forfeit (terminate) your lease if you breach certain covenants or fail to pay service charges. In practice, this is rare, and courts grant relief routinely, but it remains a draconian possibility – you could lose your entire property over a debt as low as £350.

The Bill would abolish this remedy for long residential leases and replace it with a new “statutory lease enforcement scheme” that is more proportionate. Landlords could still recover debts, but they’d have to use standard debt recovery processes, not forfeiture.

C. Reinvigorating Commonhold

The Bill proposes a new legal framework for commonhold, including:

• Allowing conversion to commonhold with just 50% leaseholder support (instead of requiring unanimity)
• “Sectional commonhold” allowing different parts of a building to have different arrangements
• Enhanced debt recovery mechanisms for commonhold associations

D. Rentcharge Reform

For freehold properties with rentcharges (a form of recurring payment), the Bill would abolish certain enforcement methods (like distraint or appointing receivers) and require rentcharge owners to use proportionate debt recovery instead.