Leasehold Reform 2026: what developers of new-build sites need to know

Major leasehold reform is firmly underway. Following publication of the draft Commonhold and Leasehold Reform Bill on 27 January 2026 developers face a materially reshaped environment for planning, structuring, and selling new-build homes.  We outline below the key developments and the practical implications for developers on their current and future schemes.

The Government’s direction of travel: ending leasehold for new flats

A consultation “Moving to Commonhold: banning leasehold for new flats” sets out the Government’s plan to introduce a full ban on selling new flats as leasehold, with limited exemptions. It seeks views on the scope of the ban (which flats and circumstances should be captured) and appropriate exemptions needed for legitimate situations including home purchase plans, which impact Islamic finance structures, and shared ownership leases.

This consultation confirms what the sector anticipated: the Government wants new flats to be delivered as commonhold by default.

The consultation emphasises that developers can help the Government understand how to manage the transition without disrupting the supply of new homes; particularly where developers have already begun selling off‑plan on a leasehold basis or hold land that is leasehold‑encumbered.

The draft Commonhold and Leasehold Reform Bill: a structural rewiring of flat ownership

The draft Bill is explicit in its aims. It will:

• Ban leasehold for most new flats with the detail of exemptions to be explored in the consultation.
• Reinvigorate the commonhold framework, making it easier for developers to adopt commonhold and for existing leaseholders to convert.
• Cap ground rents on existing leases at £250, phasing to a peppercorn after 40 years.
• Abolish forfeiture, replacing it with a statutory “fairer and more proportionate enforcement scheme.”
• Remove the draconian remedies available to rentcharge owners for non-payment under sections 121 and 122 of the Law of Property Act 1925 replacing them with proportionate enforcement measures.

From a developer’s perspective, the Bill signals a decisive move away from leasehold economics, particularly as ground rents (traditionally a material income stream or investment product) which no longer exist in new flat schemes, will now also diminish significantly in existing stock.

The reforms place commonhold, not leasehold, at the heart of future flat development. The draft Bill strengthens and modernises the commonhold framework, including provisions designed to:

• Make it easier to use commonhold in mixed‑use and phased developments.
• Give homeowners collective control over budgets, management and repairs.
• Provide clearer conversion pathways for existing buildings.
• Introduce new governance tools, including mechanisms for replacing directors and enforcing contributions.

Practical considerations for developers now

While the Bill is not in final form, the ultimate outcome is clear and developers should consider the preparation which will be required and how it may impact their plans.

A. Review tenure strategy on all upcoming schemes

Given that new leasehold flats will be prohibited, developers should consider preparing the structure of forthcoming phases and pipeline sites as commonhold unless a consultation-supported exemption applies.

B. Prepare for documentation overhaul

Drafting commonhold documentation (including Commonhold Community Statements, governance documents, budgeting, and phased development provisions) will require early planning.

C. Managing transitional schemes

Developers midway through leasehold projects should identify plots already sold on a leasehold basis, consider if mixed tenure (leasehold for legacy plots and commonhold for future phases) is viable or whether a full pivot is required and engage early with lenders and managing agents on emerging standards.

D. Sales messaging and purchaser education

Commonhold remains unfamiliar to many buyers. Developers will need to prepare clear, consistent marketing materials explaining what commonhold ownership means, how collective control works, and the protections built into the new statutory framework.  The Government is positioning commonhold as a fairer, more transparent model than leasehold, and buyers will need help understanding the differences.

What this means for the new-build sector

This reform package is not incremental; it is transformational. Collectively, the consultation and draft legislation aim to:

• End leasehold as a mechanism for new flats.
• Remove the financial model that underpinned historic flat development (ground‑rent income).
• Shift control from landlords to homeowners, both financially and operationally.
• Unlock stalled sales and improve mortgage-ability for older leasehold stock.
• Accelerate the mainstream adoption of commonhold.

Whether the reality of reforms will have the desired impact for homeowners remains to be seen.  The cap on ground rents for existing leases is to be welcomed as it will remove the two-tier market and bring them in line with leases granted since the Leasehold Reform (Ground Rent) Act 2022.  The removal of statutory remedies for rentcharge owners will have a positive impact on the marketability of burdened properties.

However, even in the commonhold structure, most buildings will still need to employ a managing agent to organise building maintenance, prepare accounts and deal with external professionals.   Disputes relating to service and building costs and managing agents seem set to continue.  Without proper regulation of managing agents, commonhold will not solve the problem for consumers.  A response is still awaited to the Government's 2025 consultation Strengthening leaseholder protections over charges and services: consultation - GOV.UK which proposed mandatory minimum qualifications for managing agents.  Any regulatory requirements will need to be balanced against the expectations where buildings are managed solely by the residents.

For developers, the message is clear: tenure transformation is now a planning and commercial priority, not a distant policy concept.