The Government has announced a series of proposed leasehold reforms in England and Wales that could significantly change the leasehold landscape.
Set out in the draft Leasehold and Commonhold Reform Bill, the proposals aim to address long‑standing concerns around escalating ground rents, forfeiture, and the continued use of leasehold for new flats. While the announcement has been widely reported in the media, the legal detail – and the practical impact for leaseholders – requires careful consideration.
Below, we explain what has been announced, what stage the reforms are at, and what leaseholders should be aware of now.
What has the Government announced?
According to the Government, the draft Bill will introduce several key changes to leasehold law, including:
- A cap on ground rent at £250 per year for existing leaseholders in England and Wales
- A commitment to reduce ground rent to a peppercorn (effectively zero) over time, with full implementation expected after 40 years
- A ban on the creation of new leasehold flats
- The abolition of forfeiture, which currently allows leaseholders to lose their home – and any equity built up – for relatively small debts
These measures are intended to improve fairness and security for leaseholders, many of whom have been affected by rising charges and restrictive lease terms.
How does this differ from previous leasehold reforms?
Ground rents were abolished for most new residential leasehold properties in England and Wales in 2022. However, that reform did not apply retrospectively.
As a result, many existing leaseholders have remained liable for ground rents that can increase over time and, in some cases, make properties harder to sell or mortgage.
The newly proposed reforms are significant because they are designed to address existing leasehold homes, not just new builds. If implemented as planned, this would represent a substantial shift in how leasehold arrangements operate in practice.
What is forfeiture and why does it matter?
Forfeiture is a legal mechanism that allows a freeholder to take back possession of a leasehold property if the leaseholder breaches the terms of the lease – including by defaulting on relatively small sums.
Under the current system, a leaseholder can, in certain circumstances, risk losing their home and any equity they have built up for debts as low as £350.
The proposed abolition of forfeiture is therefore a significant development, offering greater protection and security to leaseholders while reducing the risk of disproportionate outcomes.
Is the Leasehold and Commonhold Reform Bill law yet?
No. At this stage, the reforms are proposals, not law.
The draft Bill will now be scrutinised by MPs on the Housing Committee before making its way through Parliament. The Government has indicated that the ground rent cap could come into force in late 2028, although this timeline could change as the Bill progresses.
As with any legislation, the final wording – and the way the reforms are implemented – will be crucial.
What could the proposed leasehold reforms mean in practice?
If the reforms are introduced as proposed, leaseholders may benefit from:
- Reduced long‑term financial obligations linked to ground rent
- Greater certainty when selling or refinancing leasehold properties
- Increased protection against losing their home for minor breaches or debts
However, leaseholders should be aware that:
- The reforms are not yet in force
- Transitional arrangements may apply
- Individual lease terms will still matter
What should leaseholders do now?
While there is no immediate action required, leaseholders may wish to:
- Review the terms of their lease, particularly ground rent provisions
- Seek advice before selling, extending a lease, or disputing charges
- Stay informed as the Bill progresses through Parliament
Understanding your current legal position remains important, even where reform is anticipated.
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Disclaimer
The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional. The contents of this blog refers to the process in England and Wales.
This blog was written by Terri Katic, Solicitor & Head of Halesowen Property Team, in our Residential Property Team.
This article is based on the Government’s announced proposals and media reporting. The law may change as the Bill progresses through Parliament.