Government consults on banning new leasehold flats, ground rent cap, and transition to commonhold

This seeks opinions from leaseholders, landlords and managing agents about how the Bill’s proposed ban on new residential leaseholds should be implemented in practice.

The consultation can be accessed here: https://www.gov.uk/government/consultations/moving-to-commonhold-banning-leasehold-for-new-flats

The document signals a further step forward in the Government’s policy to overhaul the existing system. Whereas the 2024 Act focused primarily on reforming the existing leasehold system, this consultation explores how leasehold can cease to be the default tenure for new flats altogether.

Ban on new leasehold flats

The central proposal is to prohibit the grant of new long residential leases of flats (subject to defined exceptions), with new flatted developments instead required to adopt a reformed commonhold structure.

The Government consultation seeks views on:

• The scope of the proposed ban;

• When the ban should be commenced;

• What transitional arrangements should be implemented;

• Possible exemptions;

• The costs and benefits of moving to commonhold for respondents;

• The practical operation of commonhold in new schemes.

The policy intention is clear: to reduce reliance on leasehold and to establish commonhold as the long-term default model for flat ownership.

It is important to emphasise that this is a consultation. No prohibition is currently in force, and any ban would require primary legislation.

Continued implementation of the Leasehold and Freehold Reform Act 2024

The consultation makes clear that the ban on new leasehold flats forms part of a broader reform programme and reiterates the Government’s intention to implement the remaining provisions of the 2024 Act.

Those outstanding provisions include significant valuation reforms, most notably:

• The proposed abolition of marriage value in enfranchisement and lease extension calculations; and

• Introduction of provisions requiring valuers to disregard any onerous element of ground rent when assessing the premium.

These valuation reforms are among the most commercially significant elements of the 2024 Act.

Practical considerations

A prohibition on new leasehold flats, a cap on existing ground rents, and the pending valuation reforms under the 2024 Act raise distinct but overlapping issues:

• Property management funding and structuring — leasehold remains embedded in current and property management practice.

• Lender requirements — lenders will require certainty around enforcement and security within commonhold structures.

• Investment vehicles — A ground rent cap and the abolition of marriage value would directly affect freehold investment valuations.

• Existing leaseholds — The treatment of current leasehold buildings remains separate from the new proposals affecting new developments – although old flats will be given the option to move to commonhold (this will not be automatic).

Next steps
The consultation is expected to close on 24 April2026. A Government response is anticipated later in the year, with a revised Commonhold and Leasehold Reform Bill potentially to follow that implementing recommendations put forward in the response.

It is, again, important to highlight that these proposals are not yet in force:

• There is no immediate ban on granting new residential leases.

• There is no ground rent cap currently in force beyond existing statutory restrictions on new leases.

• The valuation reforms under the Leasehold and Freehold Reform Act 2024 — including the abolition of marriage value and the disregard of onerous ground rent terms —will require further regulations before they take effect.

We will continue to monitor the consultation and the Government’s implementation programme under the 2024 Act and report further once the Government publishes its response.

Mark Vinall, Partner, Ashley Wilson Solicitors