By Chris Macartney
Partner, Bishop & Sewell LLP
The Government’s draft Commonhold and Leasehold Reform Bill represents the most ambitious attempt in decades to reshape residential ownership.
However, the Housing Committee’s report issued today makes clear that, in its current form, the legislation risks falling short of delivering the transformative reform leaseholders expect.
The publication of the House of Commons Housing, Communities and Local Government Committee’s report on 27 May 2026 marks a critical juncture in leasehold reform. While acknowledging that the draft Commonhold and Leasehold Reform Bill is a “significant step” forward, the Committee has delivered a clear message: reform must go further, and it must be delivered faster.
For practitioners, investors, and leaseholders alike, the report offers a detailed roadmap—not only of what the legislation currently proposes, but of what remains to be addressed before meaningful structural change can be achieved.
Ground Rents: Financial Reform with Political Urgency
The proposed £250 cap on ground rents for existing leases represents one of the most immediate and tangible reforms. The Government’s intention to reduce these rents eventually to a peppercorn signals a decisive break with the traditional investment model underlying leasehold ownership.
However, the Committee’s scrutiny exposes a key tension. It questions both the timing and the structure of the reform:
- The proposed implementation timetable, potentially extending to 2028, is considered too slow, with a recommendation that the cap be introduced by late 2027.
- The 40-year transition period to a peppercorn rent is regarded as insufficiently justified, with the Committee explicitly raising the alternative of a 20-year period.
This reflects a broader political reality. Leasehold reform has been promised repeatedly over recent election cycles, and the Committee is clearly concerned that continued delay risks undermining confidence in the legislative process.
Commonhold: From Alternative to Default
Perhaps the most significant structural shift proposed by the Bill is the long-term transition from leasehold to commonhold.
The Committee endorses this direction but identifies practical barriers that may limit its effectiveness. In particular, it recommends that:
- Commonhold conversion should become the default outcome of collective enfranchisement, rather than requiring an additional layer of consent and process.
This recommendation is critical. Without procedural simplification, commonhold risks remaining theoretically available but practically unattainable—particularly in larger or less cohesive blocks.
The implications are far-reaching. If implemented, this shift would fundamentally alter the commercial and legal assumptions underpinning enfranchisement claims, replacing a landlord–tenant model with one based on collective ownership and self-governance.
The Missing Piece: Law Commission Reform
A central criticism of the draft Bill is what it omits.
The Committee expresses concern that several key Law Commission recommendations—particularly those relating to enfranchisement and the right to manage—have not been included. These reforms were intended to:
- simplify and reduce the cost of lease extensions and freehold acquisition; and
- facilitate the transition to commonhold for a broader range of leaseholders.
Without these measures, the risk is a two-tier system, in which only well-resourced leaseholders are able to access commonhold, while others remain effectively locked into the existing regime.
For practitioners, this omission is likely to remain a focal point of both lobbying and amendment as the Bill progresses through Parliament.
Regulation of Managing Agents: Structural Reform Beyond Tenure
The report also identifies a long-standing issue that extends beyond tenure reform: the regulation of property managing agents.
The Committee is unequivocal in its position. It calls for:
- the creation of an independent regulator; and
- meaningful enforcement powers, including the ability to sanction or remove agents who fail to meet required standards.
This reflects consistent evidence that leaseholders’ day-to-day experience is often driven less by legal structure and more by management practice. Reform of tenure without reform of governance would, in the Committee’s view, leave systemic issues unresolved.
Transitional Complexity and Legal Risk
The report does not underestimate the complexity of reform.
It acknowledges:
- the potential for legal challenge, particularly on human rights grounds, where reforms interfere with established property rights;
- the impact on investment structures, including ground rent portfolios; and
- the operational challenges of implementing a new tenure system, including HM Land Registry capacity and sector-wide readiness.
Importantly, the Committee concludes that legal challenge is not a reason for delay. Rather, it is an inherent feature of reform in this area, and one that Government must be prepared to defend.
Implications for the Market
The direction of travel is now clear.
If the Bill is enacted in strengthened form:
- ground rents will cease to function as a reliable long-term income stream;
- enfranchisement strategy will need to account for a presumption in favour of commonhold; and
- management structures will be subject to greater scrutiny and, potentially, regulation.
At the same time, the transition will be gradual. Leasehold will not disappear overnight. Many existing buildings will remain within the current framework for years, or even decades, particularly where conversion proves impracticable or uneconomic.
The Committee’s report confirms that leasehold reform has reached a decisive phase. The draft Bill lays the foundation for change, but its current form is unlikely to deliver the scale or speed of reform anticipated by leaseholders.
The next stage—anticipated in autumn 2026—will be critical. The Government must decide whether to adopt the Committee’s recommendations and pursue a more ambitious legislative programme, or risk entrenching a reformed but still imperfect system.
For practitioners, the message is clear: the legal landscape is shifting. The challenge now is not whether leasehold reform will occur, but how far it will go—and how quickly.
