Following the publication of the Government’s Draft Commonhold and Leasehold Reform Bill and the subsequent Housing, Communities and Local Government Committee report, the industry can no longer dismiss reform as theoretical. The question is no longer whether leasehold will change, but rather how quickly, how aggressively and with what unintended consequences.
For those of us operating in Westminster and Prime Central London, this matters enormously.
Because while the national political narrative often focuses on abusive ground rents and poor quality volume built developments, central London’s historic estate model is fundamentally different. The great estates of Grosvenor, Cadogan, Howard de Walden and the Crown Estate have, for generations, provided long term stewardship, architectural continuity and careful custodianship of some of the most valuable neighbourhoods in the world.
That distinction is often poorly understood in Westminster.
The challenge for Government now is ensuring it reforms the excesses of modern leasehold without inadvertently dismantling one of the reasons Prime Central London remains globally desirable.
The Committee’s report is, in many ways, an attempt to strike precisely that balance.
The overall tone is pragmatic rather than ideological. The Committee broadly endorses the Government’s proposals, but its conclusions also reveal a growing recognition that completely abolishing leasehold overnight is neither realistic nor economically sensible.
Instead, what we are likely to see over the next two years is a phased transition.
The final Bill, expected to be formally introduced in late 2026, will almost certainly retain the Government’s core proposals:
• A ban on most new leasehold flats
• Commonhold becoming the default tenure for future apartment developments
• A cap on existing ground rents at £250 per annum
• Eventual conversion of those rents to peppercorn arrangements
• Abolition of forfeiture in favour of a court supervised enforcement regime
• Easier pathways to collective enfranchisement and resident control
• Greater regulation of managing agents and service charge transparency
The Committee has clearly signalled that it wants the legislation strengthened further, particularly around conversion rights and the regulation of managing agents. Equally, however, there appears little appetite in Government to pursue the sort of confiscatory measures demanded by some campaign groups.
That is politically important.
Despite the rhetoric surrounding “feudal leasehold”, the Treasury, pension funds and institutional investors remain deeply conscious that ground rent portfolios underpin billions of pounds of investment exposure. Any overly aggressive abolition would almost certainly trigger years of litigation under human rights and property law principles.
The Government therefore appears to be pursuing a deliberately moderate route. Painful enough to satisfy leaseholders politically, but gradual enough to avoid destabilising the wider property and lending markets.
That is why the proposed £250 cap and 40 year transition period matter so much.
Campaigners argue it is too generous to freeholders. Investors argue it is already too punitive. In reality, the proposal probably survives precisely because neither side particularly likes it.
My suspicion is that the final legislation will ultimately tighten slightly during its passage through Parliament. The Committee has already floated shortening the transition period to 20 years, and politically that may become difficult for ministers to resist. A compromise somewhere in the middle, perhaps 25 to 30 years, now feels plausible.
Equally, the proposed implementation timetable may accelerate.
While the original expectation was for reforms to phase in gradually from 2028 onwards, there is mounting political pressure for at least some headline measures, particularly the ground rent cap and managing agent regulation, to commence earlier.
In practical terms, the market should probably prepare for three phases.
The first phase, likely from late 2027 or early 2028, will focus on existing leaseholders. Ground rent caps, service charge transparency and forfeiture reform are the easiest political wins and will likely be prioritised.
The second phase will deal with new developments. This is where things become materially more complicated.
The Government’s ambition is clearly to prohibit leasehold flats for most future schemes, replacing them with commonhold structures. Conceptually, that sounds straightforward. Operationally, it is not.
Developers, lenders, insurers and local authorities remain deeply cautious about whether commonhold is yet robust enough for large scale mixed use developments, particularly in London where many schemes involve retail, hospitality, commercial interests and layered management structures.
The reality is that commonhold works well internationally because those legal systems were built around it from the outset. England’s property system was not.
As a result, I suspect the final legislation will include substantial carve outs and exemptions, particularly for complex mixed use schemes and institutional developments. The rhetoric may be revolutionary, but the practical application will almost certainly be evolutionary.
That matters enormously in Westminster.
The large landed estates are not simply passive freeholders clipping ground rents. In areas such as Belgravia, Chelsea, Mayfair and Marylebone, they remain active urban managers with exceptionally long investment horizons.
Critics often overlook that these estates helped preserve architectural integrity and public realm quality through decades when much of London suffered from fragmented ownership and speculative short termism.
There is therefore a legitimate question over whether fully atomised commonhold ownership can realistically replicate that stewardship model.
Can residents’ associations genuinely manage major heritage estates over multiple generations? Perhaps in some cases. Certainly not in all.
This is where the politics become more nuanced than the headlines suggest.
A centrist or conservative reading of reform would acknowledge that the existing system has unquestionably failed many leaseholders, particularly in modern developments where escalating ground rents and opaque service charges became detached from any meaningful service or stewardship.
But equally, it should recognise that property rights, institutional confidence and long term custodianship also matter.
If reform becomes overly ideological, the unintended consequences could be severe.
Central London values are underpinned not simply by bricks and mortar, but by international confidence in English property law. Rapidly undermining long established income streams and ownership structures risks introducing precisely the sort of political uncertainty international capital dislikes.
The most likely outcome, therefore, is compromise.
Leasehold will gradually diminish. Commonhold will steadily expand. But the traditional estate model in Prime Central London will probably survive in modified form, particularly where heritage, placemaking and estate management remain central to an area’s identity.
For leaseholders, the reforms are broadly positive. Flats burdened by onerous ground rents should become easier to finance, mortgage and sell. Service charge transparency will improve. Resident control will expand.
For freeholders, particularly institutional and landed estates, the landscape becomes more complex. Income streams will reduce. Management obligations will increase. Yet the strongest operators, especially those already focused on stewardship over extraction, are likely to adapt successfully.
For the wider market, the reforms may ultimately prove stabilising rather than disruptive.
Ironically, by removing some of the stigma surrounding leasehold ownership, reform could improve confidence in the apartment sector overall, particularly in London where buyer caution around lease terms has become increasingly visible over recent years.
The real risk lies not in reform itself, but in overcorrection.
Britain undoubtedly needed to modernise leasehold. Few serious people now dispute that. But Westminster must also recognise that stable property rights and long term stewardship are not obstacles to good housing policy. In many parts of central London, they are precisely what made those neighbourhoods successful in the first place.
The challenge over the next two years will be preserving that balance.
