A survival guide to leasehold reform for property professionals, directors, lawyers and their insurers

The leasehold sector and property investment market is currently undergoing its biggest transformation since the cladding crisis, making it a challenge for professionals involved in the management of residential property to keep on top of the new requirements.

Just in the last few weeks alone, the UK Government published its leasehold toolkit, revealed its private rented sector data strategy to monitor Renters’ Rights Act 2025 reform, launched a call for evidence to inform its policy on the built environment professions and introduced the Small Business Protections Bill into Parliament.

In this article, our specialist lawyers from across sectors examine the key legislative changes in England and Wales over the past year or so, look ahead to changes on the horizon and explain the likely impact on surveyors, property managers, company directors, solicitors, and their insurers and brokers. We have colour coded our practical tips for each profession for easy navigation. Our tips for property managers will be relevant to landlords managing their own properties, property managers, surveyors, valuers and tenants managing property through a residents' management company or right-to-manage (RTM) company.

A brief note on building and fire safety

Recent years have seen some of the most significant legislation affecting property in decades, with the Building Safety Act 2022 and its accompanying swathes of secondary legislation now mostly in force. However, this article focusses on leasehold and freehold reform, rather than on building and fire safety legislation, with two brief exceptions:

1. The Fire Safety (Residential Evacuation Plans) (England) Regulations 2025 came into force on 6 April 2026. For certain high-rise residential buildings in England, the responsible person must prepare an evacuation plan and identify residents requiring assistance to evacuate. Property managers of affected buildings will need to ensure compliance.

2. The Building Safety (Wales) Act 2026 introduces a new building safety regime for multi-occupied residential buildings in Wales. Whilst many of the principles are similar to those in Part 4 of the Building Safety Act 2022, the Welsh Act is generally broader in scope and includes obligations relating to fire safety which apply to most buildings containing more than two residential units irrespective of height. Property managers, directors and conveyancers operating in Wales must familiarise themselves with the Act's distinct regime, which imposes different requirements and enforcement mechanisms.

Understanding the reforms

The legislation discussed in this article can best be understood as a pathway to abolition of leaseholds as a form of tenure. The reforms already in force, and due to come into force, represent an interim taming of those rules perceived as the most egregious – for example, by limiting ground rent in the Leasehold Reform (Ground Rent) Act 2022 and abolishing the draconian remedy of forfeiture. The next measure is preventing creation of new leaseholds for houses. But freehold is not workable for flats, so the government's solution is to finally make commonhold mainstream; hence the Draft Commonhold and Leasehold Reform Bill published in January 2026. Commonhold, explained below, is a novel but unpopular type of freehold, which was created in 2002. According to 2024 data, only 20 commonhold developments exist in England & Wales – but that is all set to change.

Ground rent reforms: in force now and on the horizon

In response to the so-called "ground rent scandal", the Leasehold Reform (Ground Rent) Act 2022 (GRA) prohibited ground rent on long leases of single dwellings granted on or after 30 June 2022, or 1 April 2023 for retirement homes, of more than a peppercorn. Trading Standards can impose financial penalties of up to £30,000 per lease on landlords and former landlords in breach. Tenants can also apply to the First-tier Tribunal or Leasehold Valuation Tribunal for an order to recover unlawfully charged ground rent with interest.

Conveyancers acting on the purchase of new or existing residential leases must ensure that the lease complies with GRA where relevant. Property managers must ensure they do not demand prohibited rent and must refund any prohibited rent received within 28 days of receipt. The prohibition continues to apply to a landlord after it has assigned the reversion. Managers must also understand the special rules that apply to replacement leases, deemed surrenders and regrants, and shared ownership leases.

The Draft Commonhold and Leasehold Reform Bill (CLB) published by the government in January 2026 and currently undergoing pre-legislative scrutiny targets existing long leaseholds not caught by GRA, introducing a cap on ground rent of £250 per year, reducing to a peppercorn after 40 years – a change which will reportedly affect 3.8 million properties across England and Wales and impact valuation, both of the leasehold itself and of the reversion. The government also anticipates that the change, which will put new leases and existing leases onto an equal footing, will speed up mortgage lending as most lenders impose additional checks on properties where ground rent exceeds £250 or 0.1% of the value of the property – something likely to be welcome to both conveyancers and property managers.

The Renters' Rights Act 2025 also resolved another quirk of the ground rent scandal by removing the possibility, from 27 December 2025, of a long lease meeting the definition of an Assured Shorthold Tenancy. This was a problem for leaseholders as it entitled landlords to terminate the lease for non-payment of ground rent, which had implications for mortgage finance and marketability. Solicitors advising landlords on rent arrears will need to reflect this change in their precedents and similarly property managers will want to review their procedures in light of this development.

Forfeiture & rentcharge arrears: in force now and on the horizon

Returning to the CLB, this will also abolish landlords' right to forfeiture in the event of leaseholder breach of covenant; a remedy which is perceived as disproportionate and draconian, especially for minor breaches. The Law Commission recommended that forfeiture be abolished in 2006, although the procedure set out in Part 4 of the Bill has significant differences from the Law Commission's proposals, particularly in that it applies only to long residential leases rather than all leases.

The Bill's proposed replacement is to give the courts jurisdiction to decide the appropriate remedy for a leaseholder's breach of covenant via a new "leasehold enforcement claim" process. This will be a significant change to landlord & tenant law which may affect valuation of leasehold properties. Property managers can prepare for the change by reviewing how often the remedy of forfeiture is relied upon in their portfolio to identify the likely impact.

Deciding whether to pursue forfeiture is a complex commercial decision acutely sensitive to market conditions; however, if landlords have decided to pursue forfeiture proceedings, they should consider doing so in advance of the Bill becoming law. Having clients lose the opportunity to do so is a potential pitfall for solicitors here. If passed, the new lease enforcement regime creates potential for errors in procedure, particularly during the transitional period whilst property managers and solicitors familiarise themselves with the new requirements. Professional indemnity insurers can expect notifications of claims arising from incorrect advice or procedural failures during this period.

Similarly, the Bill removes the remedies available to rentcharge owners to enforce rentcharges (usually payable on managed estates to cover communal maintenance) under ss121-122 Law of Property Act 1925. These include taking possession of the property until arrears are settled, appointing a receiver with mortgagee-like powers or granting a lease which survives payment of the arrears to trustees responsible for raising money to settle arrears – extreme remedies if arrears are modest. The Bill repeals ss121-122, which means that rentcharge owners will have to seek recourse via proceedings or via bankruptcy instead. Rentcharge owners will also be required to give notice of proposed enforcement. These changes build on the Leasehold and Freehold Reform Act 2024's retrospective removal from 27 November 2023 of the statutory remedies for specific historic rentcharges (ie those classed as "regulated rentcharges", which could not be created after 1977).

The Bill is in the earliest stage, not yet having been introduced to Parliament, but in anticipation of this change, if landlords have decided to exercise their rights under s121-122, they should do so before the Bill becomes law. A similar trap will exist for solicitors as in relation to forfeiture, above. If the Bill becomes law, solicitors will need to review their precedent advice on the remedies available for tenants' breach of covenant and rentcharge arrears.

Abolition of leasehold: on the horizon

From the select pruning of the most controversial features of leasehold, the Leasehold and Freehold Reform Act 2024 (LFRA) goes much further by banning the creation of new long leases for residential houses unless a permitted lease certificate is obtained: only possible for certain leases where the superior lease (or agreement for lease) pre-dates 22 December 2017 or for retirement and shared ownership properties. In addition, LFRA contains a number of other measures aimed at increasing tenants' rights.

Although LFRA became law in May 2024, most of its provisions are not yet in force. However, the government confirmed on 20 May 2026 that it is committed to implementing the Act "as quickly as possible through an extensive programme of secondary legislation" – not an attractive prospect for busy professionals still adapting to new building safety regime.

The Act is not without controversy, though, as the Court of Appeal is expected to hear the appeal in Abacus Land 1 (Holdco 1) Limited & Ors v Secretary of State for Housing, Communities and Local Government [2024] EWHC 2753 (Admin) this month – a judicial review claim by freeholders arguing that the LFRA breaches their human rights by reducing the cost of lease extensions/enfranchisement.

What's in force now?

Some provisions are already in force:

1. The abolition of the requirement for two years of ownership before tenants become eligible to claim a lease extension or buy the freehold of their house (31 January 2025).

2. Extending tenants' RTM where up to 50% of the internal floor area is used for non-residential purposes (up from 25%) and introducing a new costs regime for RTM claims, generally requiring that each party pays its own costs (3 March 2025).

3. New secondary legislation came into force, setting out amended model articles for RTM companies and altering the voting rights of landlords (RTM Companies (Model Articles) (England) (Amendment) Regulations 2025 and RTM Companies (Model Articles) (Wales) (Amendment) Regulations 2025) (3 March 2025).

4. Prohibition on landlords' recovery of non-litigation costs in connection with RTM claims through a variable service charge (3 March 2025).

Property managers will need to review their service charge calculations to ensure that no charges for the latter are included and familiarise themselves with the new model articles to ensure that their clients are accurately advised on their voting rights. Conveyancers and solicitors acting in property disputes will need to reflect these changes in their advice.

What's yet to be implemented?

The headline ban of new leaseholds for houses is not yet in force. In addition to this, LFRA will substantively amend the law relating to leasehold enfranchisement and lease extensions of both houses and flats, including by requiring new leases of houses to be at a peppercorn rent (rather than market rent), and preventing landlords from disputing an enfranchisement or extension claim on the basis that they require possession to redevelop or occupy themselves – something that conveyancers or solicitors acting in property disputes will need to become familiar with. This may not be straightforward as the government's leasehold toolkit guidance note suggests that there are drafting errors in LFRA: "important note: The reforms to the amended enfranchisement scheme (purchasing a freehold or extending a lease) require the fixing of technical flaws in the LFRA before they can be implemented. The government intends to make these changes through primary legislation." There are also a number of esoteric changes to the hold enfranchisement and lease extensions process, including new valuation rules that valuers will need to familiarise themselves with and apply when in force.

Of particular interest to property managers is Part 5 of the LFRA 2024, which introduces comparable protections in relation to estate management charges as those that apply to residential service charges. Property managers of both leasehold and freehold estates face new transparency and accountability requirements under the LFRA 2024. Part 5 requires that estate management charges be reasonable and introduces consultation obligations for major works. Estate managers must provide annual reports and comply with rights to information and homeowners can even remove a manager in cases of serious management failure.

Property managers can expect a new freehold code of management practice and will be required to sign up to an approved redress scheme. And this isn't likely to be the only change in this area: the government confirmed in November 2025 that it plans to consult on enabling residents of privately managed estates to hold estate managers to account for estate costs, and the Law Commission also plans to consult on creating a new right for freeholders on housing estates to assume management of their estates.

Similarly, LFRA introduces new statutory rights for sellers to request sales information from landlords and estate managers for the purpose of a contemplated sale. The information must be provided within the specified period and the costs of doing so will be capped. Sanctions for breaches include of damages of up to £5,000, or refunding excessive charges.

The sales information provisions of the LFRA 2024 directly affect conveyancers' practices. The new statutory right to request sales information aims to address the problems of significant delays in receiving information, lack of requirement to obtain information from third parties, uncapped charges, and lack of enforcement mechanisms. When in force, conveyancers will be able to rely on prescribed forms for sales information requests, with defined timescales for responses and capped charges. This should streamline the conveyancing process and reduce costs for sellers.

Directors of estate management companies and landlord companies face new obligations under the LFRA 2024: they will need to ensure their companies comply with the estate management regulation requirements, including providing reasonable charges, conducting required consultations, and providing annual reports and information to homeowners . Directors must also ensure compliance with sales information requirements and redress scheme membership.

The power for homeowners to apply to substitute the estate manager in cases of serious management failure creates a new risk for directors of estate management companies. This is analogous to the special measures regime under the BSA 2022 and could result in removal of the company from its management role. D&O insurers may face claims where directors fail to ensure compliance with the new regulatory requirements, particularly if this results in enforcement action, financial penalties, or substitution of the manager.

Banning leasehold and the rise of commonhold: on the horizon

As mentioned, the draft Commonhold and Leasehold Reform Bill (CLB) proposes to make commonhold the default tenure for new flats and ban the sale of new leasehold flats in England and Wales (with limited exceptions). The provisions largely mirror the equivalent provisions relating to the ban on new leasehold houses in the LFRA 2024, which are not yet force.

What is commonhold?

As mentioned, commonhold is a form of property ownership introduced by the Commonhold and Leasehold Reform Act 2002. Although rare in England & Wales, it is a common form of property ownership in Australia (strata title) and US (condominium title).  Commonhold is a type of freehold ownership of a single property within a larger development, where the property owner is also a member of a Commonhold Association (a company limited by guarantee) that owns and manages the common parts of the development. Each commonhold will be managed in accordance with a commonhold community statement, most of which is prescribed by the Act, as are the articles of association of the Commonhold Association.

Commonhold can be used for houses, mixed use and commercial developments, but is usually discussed in the context of residential flats, with the government calling it "the future of flat ownership". Commonhold seeks to address perceived problems with long leases, such as preserving the property value (whereas the value of long leases reduces over time), enabling property owners to control the management process and avoiding problems with inconsistent or poor drafting of leases. No ground rent will be payable, but leases held on a commonhold basis will still be able to be let.

Impact on property professionals

For conveyancers, the ban on new leasehold flats will fundamentally alter the structure of new flat developments and will require familiarity with a type of property ownership that most lawyers will only faintly remember from law school. Residential property work is already the leading cause of professional indemnity claims against lawyers and the effective replacement of leasehold with commonhold for residential flats is a recipe for even more claims: new, relatively untested law (albeit some from 2002), brought in at speed, impacting something of high value (property) which is of primary importance to most people (their homes) and the bedrock of the mortgage market. Regular mandatory training will be key to mitigating risk, as will revised and evolving precedents. Residential conveyancers are already under acute pressure to bear the bulk of the risk for an ever-reducing fee, and pricing this work will likely be complex and competitive.

Property managers are also likely experience unique pressures: a transition of client base away from investment companies and more disinterested commercial landlords towards more hands-on and demanding lay clients. In light of this, it would be prudent to review procedures for identifying and supporting vulnerable persons. Further, property managers should ensure that their professional indemnity proposals accurately capture the type of work being carried out, especially where this changes over time. A similar exercise of familiarisation with previously obscure legislation will be required and more intra-resident disputes can be expected, which may also demand greater familiarity with company law.

Directors of companies that hold reversions to long residential leases will need to consider the impact of ground rent restrictions on their income streams. Directors will also need to ensure their companies understand and implement the new lease enforcement procedures.

Regulation of property managers: on the horizon

The government has consulted on regulation of, and mandatory qualifications for, managing agents, with the government's response awaited. This initiative is separate from the LFRA 2024 but forms part of the broader programme to increase regulation of residential property management.

Conclusion

We hope that the above provides some navigational tips during this time of intense change; naturally as defence specialists, our minds turn to the risks, but there will be opportunities too. Kat Cusack (for surveyors & property managers), Matt Watson (for company directors) or James Ainsworth (for lawyers) would be delighted to discuss any queries or comments arising from this article, which was prepared with the support of Aimee Talbot (Knowledge Lawyer for the Insurance Group).