Leasehold & Commonhold Reform: A Guide for Flat Sellers

What Has Been Announced?

The government has published a draft Leasehold and Commonhold Reform Bill, which includes two headline changes:

1. A cap on ground rent for existing leases
   Ground rent will be capped at £250 per year, with a long‑term plan to reduce it further to a peppercorn (effectively zero).

2. A new legal route for leaseholders to convert their building from leasehold to commonhold
   This would allow flat owners, collectively, to own their flats outright and jointly manage their building - removing the freeholder entirely.

Alongside this, the government also intends to ban new leasehold flats, making commonhold the default form of ownership for future developments.

Together, these reforms are designed to end what many consider to be the unfairness of the leasehold system and bring England more in line with the rest of the world.

Why This Is Genuinely Good News for Leaseholders

There is no doubt that this is positive long‑term news for flat owners - and not just in a political or theoretical sense.

For decades, leasehold flat ownership in England has been widely criticised as outdated, unfair, and heavily tilted in favour of freeholders rather than homeowners. Many flat owners feel they have had very little control over their own property, despite paying substantial sums to buy it.

Leasehold has long been criticised because:

• Leases are wasting assets - they run down over time, meaning a flat can become harder to sell and mortgage the shorter the lease becomes

• Ground rent often feels like paying rent on a home you already own, with no tangible benefit in return

• Lease extensions can be expensive, stressful, and legally complex

• Freeholder disputes can delay sales, increase legal costs, and cause significant anxiety

• Managing agents are often appointed by freeholders, leaving leaseholders feeling powerless over service charges and maintenance standards

For many owners, this has created a sense that flat ownership is structurally stacked against them, particularly when compared to freehold house ownership.

These reforms signal a clear and important direction of travel:

Leasehold is being phased out, and flat ownership is being fundamentally improved.

This matters because property markets are shaped by long‑term confidence, not just immediate legal changes. When buyers believe a system is becoming fairer, more transparent, and more stable, fear and stigma begin to fade. Over time, this supports stronger demand, improved mortgage confidence, and more resilient values.

In simple terms:

This shows the government is finally serious about fixing the problems of flat ownership, rather than simply tinkering around the edges.

That is reassuring - especially for owners of:

• Short lease flats, where the fear of a wasting asset has historically caused heavy discounts

• Flats with high or doubling ground rents, which have often been labelled “toxic” by lenders and buyers

• Flats in poorly managed buildings, where leaseholders have felt trapped by structures they cannot control

For these groups in particular, the reforms provide something that has long been missing from the leasehold market: a credible sense that the system is moving in their favour, not against them.

But What Does This Mean in Practice for Sellers in 2026?

Here is the most important thing to understand:

These reforms will not materially change the sales process or pricing overnight.

Although the announcement is significant, the legislation still needs to go through a long and complex journey before it becomes real, day‑to‑day law.

In practical terms, this means:

• The bill still has to pass through multiple stages in Parliament, including detailed scrutiny, amendments, and votes in both the Commons and the Lords

• Even once passed, much of the detail will be set out in secondary legislation and regulations, which take time to draft and implement

• Mortgage lenders, valuers, conveyancers, and managing agents will all need time to update their policies, systems, and processes

As a result, the reforms are widely expected not to take full legal effect until around 2028.

That means most sales in 2026 and 2027 will still operate under the existing leasehold system, with buyers, solicitors, and lenders continuing to assess flats based on today’s rules - not tomorrow’s intentions.

This is an important reality check for sellers. While the direction of travel is clearly positive, the housing market does not turn on a sixpence, and legal reform of this scale inevitably moves slowly.

The sale process will largely stay the same

If you are selling a leasehold flat in 2026, you should still expect a very familiar conveyancing process, including:

• A management pack (LPE1), often taking several weeks to obtain

• Service charge accounts, budgets, and planned major works information

• Ground rent statements and arrears checks

• Freeholder or managing agent involvement

• Detailed buyer solicitor enquiries

• Mortgage lender checks and valuation conditions

In other words, the practical mechanics of selling a leasehold flat will look much the same as they do today. The announcement does not remove the need for management information, nor does it shorten legal timelines.

If anything, there may be a short‑term increase in legal enquiries, as buyer solicitors seek reassurance about how future reforms might affect existing leases and buildings.

Mortgage lending rules won’t change immediately

Mortgage lenders base decisions on current law, current risk, and current underwriting criteria - not future political commitments.

Until the reforms are fully implemented and lender policies are formally updated:

• Short leases will still be difficult (and sometimes impossible) to mortgage

• High or escalating ground rent clauses may still restrict lending

• Buyers will still face affordability tests, valuation scrutiny, and risk assessments

From a lender’s perspective, nothing legally changes until the law itself changes. So while market sentiment may begin to improve, mortgage availability is likely to remain largely unchanged in the short term.

This is why sellers should be cautious about expecting sudden improvements in buyer demand or pricing simply because of today’s announcement. The real transformation will come later - once the reforms are fully in force and the mortgage market has adapted.

Will These Reforms Increase Flat Prices in the Near Term?

This is one of the most common and understandable questions sellers are asking. While major legal reform often creates headlines about rising prices, the reality in property markets is usually more measured. Any impact on values tends to emerge gradually, as buyer confidence, lender policies, and valuation practices slowly adapt to the new legal landscape.

For most sellers: not immediately

Flat prices are driven mainly by:

• Mortgage availability

• Interest rates

• Local supply and demand

• Condition and presentation

• Lease length

None of these change overnight because of legislative announcements. In particular, mortgage criteria and valuation practices are slow to adapt, and these remain the dominant forces behind what buyers can afford and what lenders will support.

For example, a flat with a short lease or high ground rent will still be assessed today based on:

• Current lease terms

• Existing lender policies

• Present‑day legal risk

In other words, buyers and lenders will focus on today’s legal reality, rather than what the law might look like in two or three years’ time.

However, market psychology does matter, and we do expect some gradual shifts in how buyers, valuers, and investors view leasehold flats as confidence builds around the direction of reform. Sellers are likely to see the early benefits in the following situations:

1. Flats with high or “toxic” ground rents

Flats with high headline ground rents, doubling clauses, or aggressive escalation terms have often suffered from severe buyer resistance and mortgage restrictions. In some cases, perfectly good flats have become difficult to sell simply because lenders view the ground rent structure as risky.

The announcement of a future statutory cap at £250 per year, and the longer‑term move towards zero ground rent, sends a powerful signal that these problems are being structurally dismantled.

As a result, buyers and valuers may become slightly more relaxed, particularly where:

• Ground rent is high but otherwise straightforward

• Escalation clauses are predictable rather than aggressive

• The building is well managed and financially stable

This does not mean toxic ground rents suddenly become harmless - but it may:

• Reduce the size of price discounts demanded

• Increase the pool of willing buyers

• Improve investor confidence

In short, the worst‑case stigma attached to high ground rent flats may begin to ease, even before the law formally changes.

2. Short lease flats

For owners of short lease flats, this reform introduces something that has long been missing from the market: a credible long‑term escape route from lease decay.

Previously, the logic was brutal but simple:

“Extend the lease - often at great cost - or accept a heavy discount.”

The introduction of a realistic pathway to convert buildings to commonhold changes the long‑term narrative. Instead of being locked into an ever‑shrinking lease, buyers can now see a future where:

• The lease is eliminated altogether

• Flat ownership becomes permanent

• Lease extension costs are no longer inevitable

This does not remove the immediate problem - short leases will still be discounted in the short term because of mortgage restrictions and extension costs - but it does soften the fear factor.

Over time, this is likely to:

• Narrow short‑lease discounts

• Increase investor appetite

• Improve buyer confidence

• Reduce the sense of urgency and distress around short‑lease sales

So while sellers should not expect dramatic near‑term price rises, they can take comfort in knowing that the structural outlook for short lease flats has materially improved, even if the practical benefits take time to feed through.

Why Scepticism Is Understandable

Many leaseholders have heard big promises before, and for many people, scepticism is both natural and justified.

Over the past 20–30 years, successive governments have announced leasehold reforms that promised to:

• Make lease extensions cheaper

• Improve fairness

• Strengthen consumer protection

• Reduce freeholder power

Yet in practice, many of these reforms have been:

• Slow - taking years to filter through into real‑world transactions

• Diluted - weakened by lobbying and political compromise

• Complicated - creating new legal processes that are hard for ordinary homeowners to navigate

• Hard to access - requiring professional advice, tribunal applications, or significant upfront cost

As a result, many leaseholders understandably feel wary when they hear bold political statements. They have learned, often through difficult personal experience, to treat reform announcements with caution rather than celebration.

So it is entirely reasonable for sellers to ask:

“Will this really happen, and will it actually help me?”

Will freeholders resist?

Yes - and very strongly.

These reforms threaten billions of pounds of freehold investment value. Ground rents, permission fees, and reversionary interests form the backbone of many institutional property portfolios. Any policy that undermines this income stream is bound to face intense resistance.

We fully expect to see:

• Heavy lobbying of MPs and ministers

• Legal challenges and judicial reviews

• Media campaigns warning about unintended consequences

• Pressure for compensation and transitional protections

All of this may slow the pace of reform and water down certain details.

However, politically, leasehold reform has huge public support, and this is crucial. There are millions of leaseholders across England, many of whom have experienced the problems of the current system first‑hand. This creates powerful electoral pressure for change.

In addition, leasehold reform now enjoys strong cross‑party backing, making it far harder for any single interest group to block progress entirely.

For these reasons, most housing and legal experts believe:

The reforms will happen - but more slowly, and with compromises.

In other words, sellers should expect gradual, step‑by‑step improvement rather than overnight transformation. The direction of travel is clear, even if the journey itself will take time.

Commonhold: A Big Shift, But Not a Quick Fix

Allowing leaseholders to convert their buildings to commonhold is a major structural change, but it won’t be simple - and it certainly won’t be quick.

In theory, commonhold offers a far fairer and more transparent form of flat ownership. In practice, however, converting an existing leasehold block involves significant legal, financial, and organisational hurdles.

Conversion will still require:

• Collective agreement – Flat owners will need to reach a high level of consensus. In many buildings, residents have different financial circumstances, priorities, and time horizons, which can make agreement difficult.

• Legal processes – Conversion involves complex legal documentation, lender approvals, and changes to property titles, all of which require specialist advice.

• Professional input – Surveyors, solicitors, and managing agents will need to be involved, increasing cost and complexity.

• Funding – Freeholders will still need to be compensated, and buildings may need reserve funds in place before lenders are comfortable.

• Time and coordination – Organising dozens (sometimes hundreds) of leaseholders around a single project can be slow and challenging.

In real-world terms, this means that only the most motivated, well-organised, and financially stable buildings are likely to convert in the early years. These are typically:

• Larger modern blocks

• Developments with strong resident associations

• Buildings with professional managing agents

• Blocks with relatively high owner‑occupier occupancy

Smaller blocks, investor-heavy developments, or buildings with financial stress and internal disputes are likely to find conversion much harder and slower.

This means:

Only a small proportion of existing buildings are likely to convert in the early years.

So while commonhold is clearly the long-term future of flat ownership, most flats are likely to remain leasehold throughout the late 2020s, with gradual and uneven adoption rather than rapid, universal change.

What This Means for Sellers Thinking About Selling in 2026

This is where today’s announcement becomes most relevant for homeowners making real‑world decisions. While the reforms point clearly in the right direction, sellers need a realistic picture of how the market is likely to behave in the short term - so they can plan with confidence rather than false expectation.

You shouldn’t expect immediate transformation

If you’re planning to sell this year or next, it’s important to base decisions on today’s market conditions, not future reform. While the direction of travel is clearly positive, buyers, valuers, and mortgage lenders are still operating within the existing legal framework.

In practical terms, this means that the same factors which influence flat sales today will continue to dominate in 2026:

• Short leases still attract discounts - because of lease extension costs, mortgage restrictions, and buyer caution.

• High ground rents still concern buyers - particularly where there are doubling or aggressive escalation clauses.

• Managing agent performance still matters - slow responses, poor accounts, or unresolved disputes can still delay or derail transactions.

• Sale timelines still depend on conveyancing efficiency - especially the speed at which management packs and legal replies are produced.

In other words, while today’s announcement is encouraging, it does not remove the real-world friction that exists in leasehold sales right now. Sellers should continue to prepare their flat for sale in the same careful way: ordering management information early, resolving disputes where possible, and setting realistic pricing expectations.

But you can take comfort from the direction of travel

Even though the practical impact is gradual, this reform represents a fundamental shift in how flat ownership is viewed in England. That matters, because property markets are influenced not just by rules and regulations, but by confidence and long-term expectations.

Over time, these reforms are likely to:

• Reduce long-term fear around lease length and ground rent

• Improve buyer confidence, especially among cautious first-time buyers

• Signal systemic improvement, making flats feel like a safer form of ownership

• Support flat values over time, particularly for properties that are currently disadvantaged by the leasehold system

This is especially reassuring if:

• You’re not under immediate pressure to sell

• You’re weighing up whether to extend your lease now or wait

• You’re trying to decide between selling quickly or holding on for longer

In these situations, the reforms provide comfort that the long-term outlook for leasehold flats is improving, not deteriorating - even if the short-term mechanics of selling remain largely unchanged.

Should Sellers Wait?

This depends entirely on personal circumstances, not legislation, and there is no single right answer that applies to everyone.

For some sellers, waiting may genuinely make sense - particularly where time, financial stability, and flexibility are on their side. For others, selling sooner will still be the most sensible and least stressful option. The right decision depends on a careful balance of personal priorities, financial pressures, and risk tolerance.

It can help to think in terms of control versus uncertainty. Waiting may offer potential long‑term upside, but it also involves living with uncertainty, ongoing costs, and the possibility that reforms take longer to arrive or deliver less immediate benefit than hoped.

Waiting may make sense if:

• You have time - you are not working to a fixed deadline such as a relocation, probate sale, or financial commitment, and can afford to be patient.

• Your lease is still reasonable - typically above 80 years, meaning mortgage access remains good and lease decay is not yet a major issue.

• Your flat is mortgageable - allowing you to benefit from the widest possible buyer pool when you do decide to sell.

• You are not under financial pressure - so ongoing service charges, ground rent, and maintenance costs are manageable.

In these situations, holding on may allow you to benefit gradually from improving market sentiment, future legal clarity, and a more confident buyer base.

Selling sooner may make sense if:

• Your lease is short - particularly below 70–75 years, where mortgage restrictions and lease extension costs can significantly erode value and buyer demand.

• You’re facing high service charges or major works - which can deter buyers and create ongoing financial strain.

• You need certainty - for personal, family, or financial reasons, such as debt reduction, divorce, inheritance planning, or relocation.

• You want to avoid legislative uncertainty and delays - major reforms often take longer than expected and rarely move in straight lines.

In these circumstances, waiting may not materially improve your position, and selling sooner can provide clarity, certainty, and peace of mind.

The key point is this:

There is no universal answer - but sellers should not delay purely in the hope of instant, reform‑driven price rises.

The reforms point firmly in the right direction, but the benefits will filter through gradually rather than suddenly. For most sellers, personal timing, financial security, emotional wellbeing, and risk tolerance should remain the primary drivers of decision‑making.

The Big Picture: Why This Is Still Very Good News

While sellers in 2026 shouldn’t expect dramatic short‑term changes, this announcement marks something far more important:

The beginning of the end of the leasehold system as we know it.

For decades, leasehold has been the default way of owning a flat in England - but it has also been one of the most criticised. This reform represents a clear political commitment to move away from a system that has long been viewed as outdated, imbalanced, and unfair.

That is hugely reassuring, because it shows that the structural problems facing flat owners are finally being addressed at their root, rather than patched over with minor technical fixes.

In practical terms, this shift means:

• Flat ownership is becoming fairer - giving homeowners greater control, transparency, and long‑term security.

• Long‑term value is being protected - by removing the wasting‑asset problem and reducing the fear that leasehold flats inevitably become harder to sell over time.

• Structural disadvantages are being removed - particularly around ground rent, lease decay, and freeholder power.

• Future buyers will have more confidence - making flats feel like a safer, more mainstream form of home ownership.

Over time, as these reforms feed through into law, lending policy, and buyer behaviour, they are likely to:

• Stabilise flat prices - reducing extreme peaks and troughs caused by lease length and ground rent issues.

• Reduce distress sales - particularly for owners trapped by short leases or toxic ground rents.

• Improve mortgage access - as lender confidence grows and underwriting criteria adapt.

• Create healthier housing markets - where flats are easier to buy, sell, finance, and manage.

Perhaps most importantly, this reform restores something that has been missing from the flat market for a long time: long‑term confidence. While change will be gradual, the direction is now firmly set - and that, in itself, is powerful reassurance for leasehold flat owners.

A More Confident Future for Leasehold Flat Owners

If you own a leasehold flat and are thinking about selling, today’s announcement is:

Good news - but not instant.

It shows that:

• The system is changing

• The direction is positive

• The worst excesses of leasehold are being tackled

But:

Sellers in 2026 should expect evolution, not revolution.

The sale process will remain familiar, pricing will remain grounded in today’s realities, and buyers will continue to focus on fundamentals such as lease length, service charges, building condition, and mortgageability.

That said, for the first time in decades, flat owners can feel confident that the future of flat ownership is improving rather than deteriorating. The long‑term outlook is more positive, fairer, and more stable than it has been at any point in recent memory.

For sellers, this creates a healthier decision‑making environment. Instead of feeling forced into rushed sales by a system that seems stacked against them, owners can now make choices based on personal circumstances, financial goals, and timing - not fear.

Whether you decide to sell now or wait, today’s reforms provide reassurance that:

• The market is moving in a more consumer‑friendly direction

• Structural disadvantages are being dismantled

• Confidence in flat ownership is being rebuilt

And while the practical benefits will take time to feed through, the trajectory is finally pointing the right way.

For many leaseholders, that alone is a welcome and long‑overdue change.