King’s Speech: new commonhold system must be ‘workable’, experts say

The Commonhold and Leasehold Reform Bill was included in the King’s Speech delivered by King Charles setting out the current administration’s legislative agenda for the next 12 months.

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The bill will establish a revised legal framework for commonhold as part of broader measures to end “the feudal leasehold system” that the government says has created barriers to home ownership in England and Wales.

The announcement follows a government white paper published in March 2025 which outlined plans for “a comprehensive new legal framework for commonhold property” in England and Wales.

Many leaseholders have reported being subject to unregulated and unaffordable ground rents, unjustified fees, or rent charges. Too often it has been noted that third-party landlords also exercise control over the management, shared facilities and related costs of leasehold buildings, instead of the leaseholders themselves who live there.

In a bid to change this, the bill will replace the existing leasehold regime by introducing full freehold ownership for individual flats, or ‘units’, within a building or larger development. It will also ban the use of leasehold for new flats and implement a new process to make it easier for existing leaseholders to convert buildings to commonholds to give them longer-term security over their homes.

The bill also amends enfranchisement provisions in the Leasehold and Freehold Reform Act 2024 that will make it cheaper and easier for leaseholders to extend their lease or buy their freehold. It also creates a new right for leaseholders in flats to request improvements, including gigabit capable broadband connection.

Under the plans, ground rent will also be capped at £250 per year which will be reduced to a nominal ‘peppercorn’ rent after 40 years. According to government data, leaseholders across England and Wales currently pay over £600 million per year in ground rent.

The bill will also strengthen protections for homeowners by abolishing certain enforcement mechanisms for maintenance charges for freehold owners and requiring notice to be issued before enforcement action is pursued. Other measures will abolish the existing leasehold enforcement regime of forfeiture by replacing it with what is being presented as a fairer system that will remove the automatic risk of home loss and better protect leaseholders’ equity.

Commenting on the bill, Tom Johnson, a property expert at Pinsent Masons, said the question now for the government was what needs to be done to make the commonhold system a “workable alternative” to the outgoing leasehold model. “We hope that government will collaborate with the industry to ensure commonhold balances the needs of all stakeholders, so it is not an unreasonable administrative burden on unit owners and allows developers sufficient flexibility to meet changing demands. Commonhold needs to preserve the best aspects of the leasehold regime – such as service charge protections – combined with the certainty of freehold ownership.” 

Johnson said in many cases it would be unrealistic to expect commonhold unit owners to manage the delivery of the services required in respect of the development. He said further regulation may be required to ensure that appropriately qualified and regulated professionals – such as managing agents and professional directors – are appointed to ensure the services they provide are both of a high quality and fairly priced.

He added: “Careful consideration will need to be given to avoid unforeseen consequences in individual sectors such as build-to-rent, university accommodation, later living developments, shared ownership and other social housing and alternative finance models, so as not to disincentive investment at a time when encouraging growth in the UK economy is critical.”

Richard Lloyd, a real estate expert at Pinsent Masons, said that further consultation would now be required to make the system work in practice. “Consultation between the government and the industry is essential to ensure that commonhold works not only for small standalone blocks of flats but also for complex, interconnected and mixed-use developments which are at the heart of vibrant and sustainable communities,” he said. “In such cases, the needs of residential and commercial occupiers must be acknowledged and balanced.”

Both Lloyd and Johnson said property developers would need to start planning to sell commonhold flats rather than leasehold flats and that lenders and insurers will need to get up to speed with how these changes may impact their business.

“Looking ahead, the industry will need time to adjust, and modify standard documents and processes so that homeowners are confident when buying commonhold units,” said Johnson. “Similarly, lenders will need to understand the risks associated with funding the development of commonhold schemes and the purchase of individual units within them.”

Lloyd said the changes would also have reverberations across the insurance industry and that insurers must be primed to develop new products that reflect the new commonhold structures. This was particularly important, he said, given the lengthy planning and development phase of many building developments.

“This transition period must be long enough to ensure that commonhold is fully understood before the proposed ban on the sale of new leasehold flats comes into force to avoid otherwise viable developments being put on hold,” he warned. “As the government is well aware, some development schemes being drawn up now will not come forward for a number of years. The cost of assembling sites and obtaining planning permission is significant in terms of both time and money. There is a significant risk that uncertainty around commonhold will deter potential developers from making the necessary investment.”