1st Report - Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill

Select Committee

Housing, Communities and Local Government Committee HC 40 27 May 2026

Report Status Response due 27 Jul 2026

Conclusions & Recommendations 56 items (25 recs)

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Recommendations

25 results

4

Based on the evidence we have heard, we believe that it is likely that the...

Recommendation

Based on the evidence we have heard, we believe that it is likely that the ground rent provisions in the draft bill, if passed in their current form, would be subject to a legal challenge on the grounds that they … Read more

Ministry of Housing, Communities and Local Government

5

However, the government should be emboldened by the fact that it has previously successfully defended...

Recommendation

However, the government should be emboldened by the fact that it has previously successfully defended judicial review cases in the High Court, including on leasehold reform. Therefore, it should push ahead with reasonable reforms to cap ground rents and fulfil … Read more

Ministry of Housing, Communities and Local Government

9

As part of its response to this report, the government must publish further evidence to...

Recommendation

As part of its response to this report, the government must publish further evidence to justify why it has proposed a 40-year transitional period before a change to peppercorn ground rent, instead of a 20-year transition. This should include publishing … Read more

Ministry of Housing, Communities and Local Government

12

The government must ensure the cap on ground rents in the final bill cannot be...

Recommendation

The government must ensure the cap on ground rents in the final bill cannot be evaded by attributing ground rent to appurtenant (related) property, such as parking spaces, or by including charges similar to ground rent in headleases. (Recommendation, Paragraph … Read more

Ministry of Housing, Communities and Local Government

14

The government must enact the remaining Law Commission recommendations on leasehold enfranchisement following the approach...

Recommendation

The government must enact the remaining Law Commission recommendations on leasehold enfranchisement following the approach set out in the Appendix of this report. In particular, the government must enact measures to ensure leaseholders can avoid paying development value upfront by … Read more

Ministry of Housing, Communities and Local Government

16

The government must enact the Law Commission’s recommendations on the right to manage process during...

Recommendation

The government must enact the Law Commission’s recommendations on the right to manage process during this Parliament, either through this bill or through a separate Right to Manage Bill to encompass the Law Commission’s ongoing project regarding freehold housing estates. … Read more

Ministry of Housing, Communities and Local Government

20

The government should not pursue its current preferred option of mandatory qualifications being implemented by...

Recommendation

The government should not pursue its current preferred option of mandatory qualifications being implemented by designated professional bodies, such as The Property Institute, as leaseholders are clear that they do not have confidence in industry bodies to carry out this … Read more

Ministry of Housing, Communities and Local Government

21

Whilst we welcome the government’s plans to repeal powers which put homeowners on private estates...

Recommendation

Whilst we welcome the government’s plans to repeal powers which put homeowners on private estates at risk of losing their home for small debts, it is regrettable that clause 156 of the draft bill falls short of the government’s commitment … Read more

Ministry of Housing, Communities and Local Government

23

The final bill must include provisions to fix the flaws which the government has identified...

Recommendation

The final bill must include provisions to fix the flaws which the government has identified in LAFRA. The government must urgently bring forward its consultation on the valuation rates used to calculate the cost of enfranchisement premiums. It should ensure … Read more

Ministry of Housing, Communities and Local Government

26

The government should ensure the new requirement to hold a reserve fund applies to new...

Recommendation

The government should ensure the new requirement to hold a reserve fund applies to new and existing leaseholders, as well as commonhold blocks, to ensure parity between the duties placed on blocks of different tenures. Whilst we recognise that this … Read more

Ministry of Housing, Communities and Local Government

28

To promote uptake of commonhold as the default ownership tenure and streamline the conversion process,...

Recommendation

To promote uptake of commonhold as the default ownership tenure and streamline the conversion process, the draft bill should establish conversion to commonhold as the default outcome of a collective enfranchisement. This would remove an additional layer of bureaucracy from … Read more

Ministry of Housing, Communities and Local Government

30

The government must clarify that a non-consenting leaseholder who subsequently participates in a conversion will...

Recommendation

The government must clarify that a non-consenting leaseholder who subsequently participates in a conversion will be required to contribute to the shared costs incurred by those who did previously participate in a collective enfranchisement. The government must design a mechanism … Read more

Ministry of Housing, Communities and Local Government

32

The final bill must include a requirement for freeholders to disclose information about the building...

Recommendation

The final bill must include a requirement for freeholders to disclose information about the building safety status of a block as part of the enfranchisement process which leaseholders follow to convert to commonhold. The government must issue guidance after Royal … Read more

Ministry of Housing, Communities and Local Government

34

The government must issue guidance after Royal Assent on the relevant documents which directors must...

Recommendation

The government must issue guidance after Royal Assent on the relevant documents which directors must provide to unit-holders for different types of vote in a commonhold association. This should include guidance on what format the documents should be presented in, … Read more

Ministry of Housing, Communities and Local Government

38

The government must urgently clarify the circumstances in which shared ownership providers will exercise the...

Recommendation

The government must urgently clarify the circumstances in which shared ownership providers will exercise the vote of a shared ownership property— either by publishing draft regulations alongside the final bill, or by publishing a statement which sets out the “specified … Read more

Ministry of Housing, Communities and Local Government

41

The government must invest in digitising HM Land Registry’s systems, making them more accessible and...

Recommendation

The government must invest in digitising HM Land Registry’s systems, making them more accessible and user-friendly, to support the move to commonhold. This will ensure HM Land Registry is prepared to respond to an increased demand for its services as … Read more

Ministry of Housing, Communities and Local Government

44

The government must continue close engagement with industry throughout the passage of the legislation, to...

Recommendation

The government must continue close engagement with industry throughout the passage of the legislation, to ensure a transition to commonhold that minimises unintended impacts on the wider housing market. However, alongside considering the responses to its ongoing consultation, the government … Read more

Ministry of Housing, Communities and Local Government

46

The government must ensure that any exemptions for the retirement housing sector from the ban...

Recommendation

The government must ensure that any exemptions for the retirement housing sector from the ban on new leasehold flats, or other aspects of the legislation, are strictly limited. Retirement housing providers must also be included in the regulation of property … Read more

Ministry of Housing, Communities and Local Government

48

The government must match this service expansion with new funding for LEASE, to enable it...

Recommendation

The government must match this service expansion with new funding for LEASE, to enable it to advise both leaseholders and commonholders. MHCLG must work closely with LEASE to develop a suite of practical guidance to promote awareness and understanding of … Read more

Ministry of Housing, Communities and Local Government

49

Throughout our inquiry, leaseholders have called on the government to act with greater urgency to...

Recommendation

Throughout our inquiry, leaseholders have called on the government to act with greater urgency to bring forward the reforms they need, both through this legislation and by implementing LAFRA. The government must pursue an ambitious parliamentary timetable for the final … Read more

Ministry of Housing, Communities and Local Government

50

The government must provide its initial response to each of the recommendations in this report...

Recommendation

The government must provide its initial response to each of the recommendations in this report within two months. It must introduce the final bill to Parliament in autumn 2026, and schedule Second Reading before the November recess. The government should … Read more

Ministry of Housing, Communities and Local Government

52

The government must reconsider and redraft provisions in the draft bill that would introduce sweeping...

Recommendation

The government must reconsider and redraft provisions in the draft bill that would introduce sweeping delegated powers which have not been adequately justified, as set out in Table 3. (Recommendation, Paragraph 232) 111

Ministry of Housing, Communities and Local Government

53

We recommend that the government must consider incorporating the proposed drafting changes set out in...

Recommendation

We recommend that the government must consider incorporating the proposed drafting changes set out in Annex 1 of this report into the final bill. (Recommendation, Paragraph 233)

Ministry of Housing, Communities and Local Government

55

The government must consider how it communicates the advantages of this legislation for homeowners responsibly...

Recommendation

The government must consider how it communicates the advantages of this legislation for homeowners responsibly and honestly. Messages from government suggesting that this legislation alone will “end leasehold” once it is passed, or that it will tackle all the injustices … Read more

Ministry of Housing, Communities and Local Government

56

The government must use the months ahead of the introduction of the final bill to...

Recommendation

The government must use the months ahead of the introduction of the final bill to ensure it has a clear strategy to deliver its manifesto commitments on leasehold reform during this Parliament. This must include a clear timetable for implementation … Read more

Ministry of Housing, Communities and Local Government

Conclusions (31) Observations and findings — click to expand

1 Conclusion

Three successive UK governments have now secured electoral mandates to address onerous ground rent terms in existing leases. Leaseholders rightly expect the government to deliver on its commitment to “tackle unregulated and unaffordable ground rent charges” through legislation. Therefore, we welcome that Part 3 of the draft bill would introduce …

2 Conclusion

We have listened to the case made by some freeholders and institutional investors that a cap on ground rents would have a detrimental impact on pension funds and wider investment in the UK. In particular, we recognise that the proposals in the draft bill may have a significant financial impact …

3 Conclusion

The suggestion by some freeholders and their representatives that ground rent is a contribution towards building safety remediation is incorrect. Leaseholders do not believe and should not expect that ground rent is used as a proxy for an additional service charge. It is shameful that some freeholders have invoked a …

6 Conclusion

We agree with the government’s rationale for a £250 cash cap, as this is a threshold where ground rent frequently affects the saleability and mortgageability of properties. A cap at this value will ensure leaseholders are protected from increases in ground rent to onerous levels. We heard from some property …

7 Conclusion

We support the government’s intention to change to peppercorn ground rent. However, it is not clear to us why the government has decided that a 40-year transitional period before a change to peppercorn is the most justified and fair policy. The government has said that it judges 40 years to …

8 Conclusion

However, based on information which the government has provided so far, it is not clear to us why a shorter transitional period of 20 years would not also represent a fair balance between the parties. Successive governments have indicated their intention to cap ground rents since at least 2017, and …

10 Conclusion

There is likely to be broad cross-party support for the measures in this draft bill. The government has said that it is aiming to bring the cap into force in late 2028, subject to parliamentary timings and its consideration of “remaining policy choices”, such as whether to allow leaseholders to …

11 Conclusion

The final bill must include a commencement clause for the £250 cap on ground rents to come into force two months after the Act is given Royal Assent—not at a time to be decided by ministers, as is currently the case in the draft bill. (Recommendation, Paragraph 79) 103

13 Conclusion

It is deeply disappointing that the draft bill does not enact the remaining Law Commission recommendations—as the government previously said it would—as enacting these measures would provide short-term relief for all leaseholders by reducing the cost of extending their lease or buying their freehold. Making collective enfranchisement cheaper and easier …

15 Conclusion

The Law Commission’s recommendations on reforms to the right to manage process would simplify it and ensure more leaseholders are able to appoint their own managing agent through the statutory process. This would offer leaseholders who are unable to convert to commonhold an accessible, more affordable route to decide who …

17 Conclusion

It is a significant shortcoming of the draft bill that it does not include provisions to introduce regulation of property managing agents, which is long overdue. We have heard many cases of appalling standards of service from some organisations—particularly England’s largest managing agent, FirstPort. For too long, agents have operated …

18 Conclusion

Whilst we acknowledge some leaseholders’ concerns with this approach— particularly the case that MHCLG should prioritise the shift to commonhold to give leaseholders greater control over the management of their blocks and the choice of managing agent—we believe that regulation of the sector is a necessary intervention to support all …

19 Conclusion

The final bill must include provisions to establish a new, independent public body as the Regulator for property managing agents, with enforcement powers. This must include powers for the Regulator to issue fines or revoke licences of managing agents who breach a statutory Code of Practice, in line with the …

22 Conclusion

The government is aware that the implementation of a significant portion of its leasehold and commonhold reform agenda—including measures which will be of the greatest financial benefit to leaseholders in the short- term—is contingent on fixing flaws which it has identified in the Leasehold and Freehold Reform Act 2024 (LAFRA). …

24 Conclusion

The commonhold model of homeownership promises to have a range of advantages over leasehold—above all the principle that homeowners should have a vote in decisions which affect their home and the building in which they live. Where a commonhold association chooses to appoint a managing agent, they will be accountable …

25 Conclusion

Whilst commonhold will introduce greater market competition among agents to deliver value for homeowners as their clients, it will not address some of the drivers behind rising service charges, such as inflation. Nonetheless, commonhold will improve transparency around how homeowners’ contributions are determined and spent, and give them a say …

27 Conclusion

The draft bill’s current proposal for a two-step process of converting to commonhold—first a collective enfranchisement, then a vote to convert to commonhold—presents a potential barrier to leaseholders realising its benefits. The government has said that it believes commonhold will be the preferred tenure of homeownership and that it wants …

29 Conclusion

We have identified that a non-consenting leaseholder who subsequently decides to participate in a commonhold, after their block has converted, may do so without contributing to the shared costs of collective enfranchisement paid by their neighbours. In an extreme scenario, a leaseholder could choose to join a commonhold days after …

31 Conclusion

Currently, freeholders are not required to disclose information regarding building safety defects in a block as part of the enfranchisement process. Leaseholders must be fully informed of any liabilities they may be assuming during the enfranchisement process when converting to commonhold. Whilst we agree with the Minister that homeowners must …

33 Conclusion

The effectiveness of commonhold associations will depend on unit-holders being supported to come to fair, informed decisions about the management of their block. Unit-holders must have access to complete information about their building and the background to different options which directors are presenting to commonhold associations, with time to consider …

35 Conclusion

The draft bill stipulates new procedural requirements in commonholds, which will be bound by company law. In some cases, such as strict time limits on filing annual accounts, these requirements may present additional challenges for commonhold associations which may not be in unit-holders’ interests. (Conclusion, Paragraph 175)

36 Conclusion

The final bill must include provisions to give the First-tier Tribunal in England and the Leasehold Valuation Tribunal in Wales discretion to waive some breaches of the statutory process. This should include technical breaches of procedure, such as a failure to meet time limits, where these do not affect the …

37 Conclusion

The draft bill is not clear what voting rights shared owners will have during the 10-year initial repair period, as this is to be determined in secondary legislation. This has understandably led to concern among shared owners that they may be shut out of decisions which directly affect them for …

39 Conclusion

The final bill should make provision for shared owners and the shared ownership provider to share the unit’s vote during the 10-year initial repair period, rather than treat the shared ownership provider as the member of the commonhold association. If there are any circumstances where the government believes shared owners …

40 Conclusion

Failure to modernise HM Land Registry’s legacy systems poses a risk to the successful implementation of commonhold. We are concerned that the government may not have supported the organisation with sufficient funding to undertake this work. Greater digitisation and automation would support the organisation to address its backlog of casework …

42 Conclusion

Clause 109—which provides for a ban on new leasehold flats—is among the most important provisions in the draft bill to advance commonhold as the default tenure, as many development stakeholders lack incentives to transition away from leasehold voluntarily. Overall, we heard that developers, housing associations, and mortgage lenders are supportive …

43 Conclusion

While the government is right to be mindful of its wider housing policy objectives, including its target to deliver 1.5 million homes during this Parliament, we believe that phasing out leasehold flats is an imperative to deliver greater security and affordability for future flat buyers. Blocks of flats will remain …

45 Conclusion

Whilst the care model and complex financing of some retirement housing— particularly Integrated Retirement Communities—may justify a different approach to other leasehold housing, we have heard evidence that homeowners in retirement housing are still exposed to some of the worst features of leasehold. In particular, the shocking record of McCarthy …

47 Conclusion

The provision of education and advice for homeowners will be vital to the success of commonhold. Many leaseholders are positive about the prospect of commonhold but will need impartial legal advice and guidance to take advantage of their new rights. We support the government’s plan to expand the Leasehold Advisory …

51 Conclusion

Some of the powers to make secondary legislation in the draft bill are drafted too broadly and too vaguely, and in places have not been adequately justified. While we agree that there is a proper role for delegated powers in the final bill, each must be clearly justified and tightly …

54 Conclusion

Overall, we welcome the draft Commonhold and Leasehold Reform Bill, which, once implemented, will make a significant step towards replacing leasehold with commonhold and give homeowners greater control. The legislation also offers an opportunity for the government to introduce measures during this Parliament which will significantly improve all leaseholders’ experience …