Leasehold and Commonhold Reform: A Guide for Flat Sellers

The government's latest leasehold reforms sound encouraging, but many flat owners are unsure what they really mean. Will prices rise? Will sales become easier? Should you wait or sell now? This article explains what is changing, what is not, and what matters most when selling.

If you own a leasehold flat and are thinking about selling, today's government announcement may feel both encouraging and confusing. Headlines talk about major reform, but many sellers are left wondering what this actually means in practice for their sale, their price and their timing. This guide cuts through the noise, explaining what has really changed, what has not (yet), and how to approach selling with clarity and confidence.

Today's announcement from the UK Government about capping ground rents and making it easier for leaseholders to convert their flats to commonhold has been widely described as a once‑in‑a‑generation reform of the leasehold system. For many flat owners, especially those who have struggled with high ground rents, short leases, rising service charges or difficult freeholders, this sounds like very good news.

But we have already heard a lot of scepticism from sellers: "It all sounds great, but what will it actually change in reality?" "Will this help me sell my flat now, or is it just political noise?" "Should I wait, or should I sell now?"

What Has Been Announced?

The government has published a draft Leasehold and Commonhold Reform Bill, which includes two headline changes:

1. A cap on ground rent for existing leases. Ground rent will be capped at £250 per year, with a long‑term plan to reduce it further to a peppercorn (effectively zero).
2. A new legal route for leaseholders to convert their building from leasehold to commonhold. This would allow flat owners, collectively, to own their flats outright and jointly manage their building, removing the freeholder entirely.

Alongside this, the government also intends to ban new leasehold flats, making commonhold the default form of ownership for future developments. Together, these reforms are designed to end what many consider to be the unfairness of the leasehold system and bring England more in line with the rest of the world.

Why This Is Genuinely Good News for Leaseholders

For decades, leasehold flat ownership in England has been widely criticised as outdated, unfair and heavily tilted in favour of freeholders rather than homeowners. Many flat owners feel they have had very little control over their own property, despite paying substantial sums to buy it.

Leasehold has long been criticised because:

• Leases are wasting assets, running down over time, meaning a flat can become harder to sell and mortgage the shorter the lease becomes
• Ground rent often feels like paying rent on a home you already own, with no tangible benefit in return
• Lease extensions can be expensive, stressful and legally complex
• Freeholder disputes can delay sales, increase legal costs and cause significant anxiety
• Managing agents are often appointed by freeholders, leaving leaseholders feeling powerless over service charges and maintenance standards

These reforms signal a clear and important direction of travel. Leasehold is being phased out, and flat ownership is being fundamentally improved. This matters because property markets are shaped by long‑term confidence, not just immediate legal changes. When buyers believe a system is becoming fairer, more transparent and more stable, fear and stigma begin to fade. Over time, this supports stronger demand, improved mortgage confidence and more resilient values.

What Does This Mean in Practice for Sellers in 2026?

Here is the most important thing to understand: these reforms will not materially change the sales process or pricing overnight.

The bill still has to pass through multiple stages in Parliament, including detailed scrutiny, amendments and votes in both the Commons and the Lords. Even once passed, much of the detail will be set out in secondary legislation and regulations, which take time to draft and implement. Mortgage lenders, valuers, conveyancers and managing agents will all need time to update their policies, systems and processes. As a result, the reforms are widely expected not to take full legal effect until around 2028.

That means most sales in 2026 and 2027 will still operate under the existing leasehold system, with buyers, solicitors and lenders continuing to assess flats based on today's rules.

The sale process will largely stay the same

If you are selling a leasehold flat in 2026, you should still expect a very familiar conveyancing process, including:

• A management pack (LPE1), often taking several weeks to obtain
• Service charge accounts, budgets and planned major works information
• Ground rent statements and arrears checks
• Freeholder or managing agent involvement
• Detailed buyer solicitor enquiries
• Mortgage lender checks and valuation conditions

If anything, there may be a short‑term increase in legal enquiries, as buyer solicitors seek reassurance about how future reforms might affect existing leases and buildings.

Mortgage lending rules will not change immediately

Mortgage lenders base decisions on current law, current risk and current underwriting criteria, not future political commitments. Until the reforms are fully implemented and lender policies are formally updated, short leases will still be difficult (and sometimes impossible) to mortgage, high or escalating ground rent clauses may still restrict lending, and buyers will still face affordability tests, valuation scrutiny and risk assessments.

Will These Reforms Increase Flat Prices in the Near Term?

For most sellers, not immediately. Flat prices are driven mainly by mortgage availability, interest rates, local supply and demand, condition and presentation, and lease length. None of these change overnight because of legislative announcements.

However, market psychology does matter. Sellers are likely to see the early benefits in two situations:

1. Flats with high or "toxic" ground rents

Flats with high headline ground rents, doubling clauses or aggressive escalation terms have often suffered from severe buyer resistance and mortgage restrictions. The announcement of a future statutory cap at £250 per year, and the longer‑term move towards zero ground rent, sends a powerful signal that these problems are being structurally dismantled. Over time this may reduce the size of price discounts demanded, increase the pool of willing buyers and improve investor confidence.

2. Short lease flats

For owners of short lease flats, this reform introduces something that has long been missing from the market: a credible long‑term escape route from lease decay. The introduction of a realistic pathway to convert buildings to commonhold changes the long‑term narrative. Instead of being locked into an ever‑shrinking lease, buyers can now see a future where the lease is eliminated altogether, flat ownership becomes permanent, and lease extension costs are no longer inevitable.

Why Scepticism Is Understandable

Many leaseholders have heard big promises before. Over the past 20 to 30 years, successive governments have announced leasehold reforms that promised to make lease extensions cheaper, improve fairness, strengthen consumer protection and reduce freeholder power. Yet in practice, many of these reforms have been slow, diluted, complicated and hard to access.

So it is entirely reasonable for sellers to ask: "Will this really happen, and will it actually help me?"

Will freeholders resist? Yes, and very strongly. These reforms threaten billions of pounds of freehold investment value. Ground rents, permission fees and reversionary interests form the backbone of many institutional property portfolios. We expect heavy lobbying, legal challenges and judicial reviews, media campaigns and pressure for compensation and transitional protections. All of this may slow the pace of reform and water down certain details.

Politically, however, leasehold reform has huge public support and now enjoys strong cross‑party backing. Most housing and legal experts believe the reforms will happen, but more slowly and with compromises.

Commonhold: A Big Shift, But Not a Quick Fix

Allowing leaseholders to convert their buildings to commonhold is a major structural change, but it will not be simple, and it certainly will not be quick. In theory, commonhold offers a far fairer and more transparent form of flat ownership. In practice, however, converting an existing leasehold block involves significant legal, financial and organisational hurdles.

Conversion will still require collective agreement among flat owners, complex legal documentation, lender approvals, professional input from surveyors, solicitors and managing agents, freeholder compensation, and significant time and coordination. In real‑world terms, this means that only the most motivated, well‑organised and financially stable buildings are likely to convert in the early years.

What This Means for Sellers Thinking About Selling in 2026

If you are planning to sell this year or next, it is important to base decisions on today's market conditions, not future reform. The same factors which influence flat sales today will continue to dominate in 2026: short leases still attract discounts, high ground rents still concern buyers, managing agent performance still matters, and sale timelines still depend on conveyancing efficiency.

Even though the practical impact is gradual, this reform represents a fundamental shift in how flat ownership is viewed in England. Over time, these reforms are likely to reduce long‑term fear around lease length and ground rent, improve buyer confidence, signal systemic improvement and support flat values, particularly for properties currently disadvantaged by the leasehold system.

Should Sellers Wait?

This depends entirely on personal circumstances, not legislation. There is no single right answer that applies to everyone.

Waiting may make sense if: you have time and are not working to a fixed deadline, your lease is still reasonable (typically above 80 years), your flat is mortgageable, and you are not under financial pressure.

Selling sooner may make sense if: your lease is short (particularly below 70 to 75 years), you are facing high service charges or major works, you need certainty for personal or financial reasons, or you want to avoid legislative uncertainty and delays.

The key point is this: there is no universal answer, but sellers should not delay purely in the hope of instant, reform‑driven price rises. The reforms point firmly in the right direction, but the benefits will filter through gradually rather than suddenly.

The Big Picture

While sellers in 2026 should not expect dramatic short‑term changes, this announcement marks something far more important: the beginning of the end of the leasehold system as we know it. Over time, as these reforms feed through into law, lending policy and buyer behaviour, they are likely to stabilise flat prices, reduce distress sales, improve mortgage access and create healthier housing markets where flats are easier to buy, sell, finance and manage.

For sellers, this creates a healthier decision‑making environment. Instead of feeling forced into rushed sales by a system that seems stacked against them, owners can now make choices based on personal circumstances, financial goals and timing rather than fear. Whether you decide to sell now or wait, today's reforms provide reassurance that the market is moving in a more consumer‑friendly direction.