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17/12/25 3:30 pm
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The government’s draft Commonhold and Leasehold Reform Bill has been published, outlining a major overhaul of leasehold rules in England and Wales that will cap existing ground rents and change how leasehold properties are managed. Landlords are now turning their attention to the practical and financial implications ahead of implementation.
What the Bill proposes
Under the draft Bill, existing ground rents will be capped at £250 per year before ultimately reducing to a peppercorn after forty years. New leasehold flats will be banned, and existing leaseholders will gain the right to convert to commonhold. The legislation will also remove forfeiture as a means to enforce small debt defaults, replacing it with a court led enforcement process.
Impact on landlord income
Many existing leases include escalating ground rent clauses or inflation linked increases, which have historically provided landlords with predictable revenue. With these streams limited or eliminated over time, landlords face a reduction in long-term income.
Sean Hooker, Head of Redress at Property Redress says:
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“This reform is a significant step for the sector, giving leaseholders clarity and certainty over ground rent, with no unexpected or hidden increases. While redress schemes won’t resolve ground rent disputes, the move helps address confusion that often causes complaints, particularly when buying or selling leasehold properties. Leaseholders should note this is just the beginning. Consultations and legislation are still needed, and changes will be phased in over time, starting with new properties before existing leases are converted.”
Landlords may need to reassess cash flow projections and consider how service charges could be restructured to compensate for lost ground rent income, as outlined in the government consultation on moving to commonhold and banning leasehold for new flats.
Transitional and administrative challenges
Converting properties to commonhold and restructuring management responsibilities will bring legal and administrative work. Some flats made unsellable by high ground rents could become more marketable, but landlords may face reduced income and increased operational complexity.
Preparation and portfolio planning
Industry advisers recommend that landlords begin reviewing leases now, modelling future income under the new framework, and identifying which assets are most exposed to the reforms. Early planning could help protect yields and streamline compliance once the legislation comes into force, expected in late 2028.
Market implications
With around five million leasehold homes in England and Wales, the reforms represent a sizeable shift for the private rental and investment sector. Landlords face the dual challenge of adapting business models while navigating reduced ground rent revenue and new management requirements. Those who act early are likely to be best positioned to ride out the transition.
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