The draft Commonhold and Leasehold Reform Bill: what 27 January 2026 changed

On 27 January 2026, the government published the draft Commonhold and Leasehold Reform Bill. If the phrase "draft bill" sounds underwhelming after years of headline announcements, it is worth pausing to understand what the publication actually means — and what it does not yet mean for the 4.98 million or so leasehold households in England and Wales.

This piece sets out the context, what the draft Bill proposes at a high level, where it sits in the legislative process, and — most usefully for people running or joining self-managed blocks today — what it means in practice right now. The short answer to that last question is: not much has changed yet, but the direction of travel is unusually clear.

How we got here

Understanding the draft Bill requires knowing the reform landscape that preceded it.

The Leasehold and Freehold Reform Act 2024 (LFRA 2024) received Royal Assent on 24 May 2024, pushed through in the final days of the last Parliament. It contains important reforms — including changes to Right to Manage that came into force on 3 March 2025 — but most of its provisions still require commencement regulations, and some will need further primary legislation before they take effect. Lease-extension valuation reform, for instance, remains delayed; a consultation originally planned for summer 2025 was itself deferred in July 2025, and the reforms are not realistically expected in force before late 2026 at the earliest, likely later still.

The LFRA 2024 was always understood to be a partial, urgent measure. It was never designed to tackle the fundamental question of leasehold tenure itself.

The Commonhold White Paper, published on 3 March 2025, signalled the current government's intention to go further. It set out a detailed vision: making commonhold the default form of ownership for new flats, banning new leasehold flats, and overhauling the practical workings of the commonhold system that has existed — but barely been used — since the Commonhold and Leasehold Reform Act 2002.

The draft Bill published on 27 January 2026 is the next step towards turning that vision into law.

What is pre-legislative scrutiny?

A draft bill is not yet a bill. Before formal introduction to Parliament, the government has submitted the draft Commonhold and Leasehold Reform Bill to pre-legislative scrutiny — typically a joint committee of both Houses, or a select committee, that takes evidence and publishes a report with recommendations. The government then decides how to respond before introducing a revised bill.

This process exists precisely to improve legislation before it is set in stone. It means that what appears in the draft today may change, sometimes significantly, before the Bill receives its first reading. Timelines are uncertain. There is no fixed date for the Bill's formal introduction, and certainly no date yet for Royal Assent or commencement.

That uncertainty is not a reason to dismiss the publication. Pre-legislative scrutiny is a meaningful stage, not a delaying tactic. The government has committed significant political capital to this agenda. But it does mean that anything described as "proposed" in this article should be read precisely as that: proposed.

What the draft Bill aims to do

The draft Bill has several interlocking ambitions. At a high level, they fall into three areas.

Reinvigorating commonhold and making it the default

Commonhold has existed in English law since 2002. Under a commonhold structure, each flat owner holds their unit on a freehold basis. The common parts — stairwells, lifts, gardens, roof — are owned and managed collectively through a commonhold association, a company in which each unit-holder is automatically a member. There is no separate freeholder. Leases do not expire. Ground rent does not exist.

In practice, commonhold has been used for only a tiny fraction of new developments. Lenders were initially reluctant to lend on it, and developers had little incentive to adopt it when the leasehold model (with ground rents, lease extension premiums, and service charge management) generated reliable income streams. The result is a system that exists in statute but barely in practice.

The draft Bill proposes to change that by making commonhold the default tenure for new flats, and by banning the grant of new residential long leases on flats. If enacted and commenced as proposed, a developer building a new block of flats would, in principle, have to structure it as commonhold rather than leasehold.

The draft Bill also proposes reforms to the commonhold framework itself — addressing the practical obstacles that have deterred take-up, including improvements to how commonhold associations are run, how costs are shared, and how disputes are resolved.

Strengthening leaseholders' rights

The draft Bill carries forward and, in places, extends the direction set by the LFRA 2024. Specific provisions are subject to change through the scrutiny process, but the stated aims include strengthening leaseholders' rights in relation to charges, information, and enforcement — building on proposals already consulted on (the government's "Strengthening leaseholder protections" consultation ran from 4 July to 26 September 2025 and is currently being analysed).

The proposals in that consultation — a standardised service charge demand format, a mandatory annual report to leaseholders, raising the Section 20 major-works threshold from £250 to £600 per leaseholder — are not yet law, but they sit within the same reform programme that the draft Bill advances.

Reforming the economic and enforcement features of long leases

The draft Bill also addresses features of the existing leasehold system that generate income for freeholders but hardship for leaseholders: ground rents on existing leases, the economics of lease extension, and the litigation cost structures that have historically allowed freeholders to charge their legal costs back to leaseholders through the service charge. These are complex areas; the precise mechanism for any reforms will be clearer once the Bill is introduced.

What about existing leaseholders?

One important aspect of the draft Bill — though details remain subject to scrutiny — is that it is expected to address not only new-build tenure but also mechanisms by which existing leaseholders might convert to commonhold. The Commonhold White Paper set out the intention to make conversion a realistic option, not just a theoretical one. How conversion would work in practice — particularly for blocks with complex lease structures, outstanding ground rents, or mortgage lender consent requirements — remains to be worked through.

This is worth watching, because for the millions of existing leaseholders in buildings that will never be "new" build, conversion routes are the only path to the tenure reform being promised.

The LFRA 2024 reforms that are already in force

While the draft Bill works its way through scrutiny and eventually Parliament, it is worth being clear about what has already changed under the LFRA 2024.

For Right to Manage in particular, the changes that came into force on 3 March 2025 are substantive:

• The non-residential floor space limit was raised from 25% to 50%, bringing many previously excluded mixed-use buildings within reach of RTM.
• The RTM company is no longer liable for the freeholder's process costs in a non-contentious claim, removing what had been a significant financial deterrent.
• Landlords' voting rights in the RTM company are now capped at no more than one-third of the votes exercisable by qualifying tenants.

The two-year ownership rule was abolished from 31 January 2025, meaning leaseholders can pursue lease extension or collective enfranchisement from day one of ownership.

These are real, in-force changes that affect leaseholders now.

What does this mean for leaseholders and self-managers today?

In practical terms, the publication of the draft Bill on 27 January 2026 does not change anything that a leaseholder, RTM director, or RMC director needs to do differently this week.

Service charge demands still need to go out on time. Reserve funds still sit in the block's trust account under Section 42 of the Landlord and Tenant Act 1987 — belonging to leaseholders, not to any manager. The Section 20 consultation process still applies to major works. Directors still owe their duties under the Companies Act 2006.

What the draft Bill does do is clarify the direction of travel more firmly than any previous signal. For blocks that have been wondering whether self-management is worth the effort — given that the leasehold system itself might be wound down over time — the draft Bill is an answer of sorts: self-management through RTM or an RMC is not rendered obsolete by commonhold. It is, in some ways, a proving ground for the kind of leaseholder-led governance that commonhold would institutionalise permanently.

What to watch for next

The timeline for the draft Bill is genuinely uncertain, but the key milestones to follow are:

• The pre-legislative scrutiny committee's report and the government's response to it.
• The formal introduction of the Bill to Parliament (first reading).
• Any announcement on commencement dates for LFRA 2024 provisions still awaiting regulations — in particular, the delayed lease-extension valuation reforms.
• The government's response to the "Strengthening leaseholder protections" consultation (closed September 2025), which may result in secondary legislation or further provisions being folded into the Bill.

The Leasehold Advisory Service (LEASE) publishes updates on the legislative programme and provides free guidance for leaseholders navigating both current law and the reform process.

---

Frequently asked questions

Does the draft Bill ban leasehold immediately? No. The draft Bill is in pre-legislative scrutiny. It has not yet been formally introduced to Parliament, let alone passed and commenced. Any ban on new leasehold flats would come into force only when the relevant provision of an enacted Act is commenced by regulations — which could be some years away.

Can I convert my existing leasehold flat to commonhold now? Not via the draft Bill — it is not yet law. Conversion to commonhold for existing leaseholders is not currently a straightforward option under existing legislation. It is something the reform programme aims to address, but the mechanism does not yet exist in a usable form.

What should my RTM company do differently in light of the draft Bill? Nothing in the short term. Run your block well, keep your trust account properly maintained, issue compliant demands on time, and follow the Section 20 process when needed. The fundamentals of good self-management are the same whether tenure reform happens in two years or five.

Will RTM still be relevant under commonhold? RTM is a route to self-management under the existing leasehold framework. Commonhold structures governance differently — through the commonhold association — but the practical experience of leaseholders managing their own block is closely analogous. The skills and habits built through RTM translate directly.

Where can I read the draft Bill itself? Draft bills and pre-legislative scrutiny documents are published on the Parliament website and linked from GOV.UK. The Leasehold Advisory Service also publishes plain-English summaries as reform progresses.