The government has published the Commonhold and Leasehold Reform Bill in draft form for pre-legislative scrutiny by MPs.

The draft Bill introduces a new legal framework for commonhold, reflecting many of the recommendations made by the Law Commission in its 2020 report. It would permit commonhold to be used more widely and includes measures to make it easier for existing leaseholders to convert, if they choose to do so.

The Bill also proposes banning the use of leasehold for new flats. Subject to limited exceptions, new flats would be required to be sold as commonhold. Alongside this, the government has launched a consultation, Moving to Commonhold, seeking views on how the ban should be implemented.

The draft legislation includes provisions to abolish the existing forfeiture system, under which landlords can seek possession of a property for breaches of lease terms. This would be replaced with a court-led process, with greater protections for leaseholders. Similar enforcement powers linked to estate rent charges on freehold estates would also be removed.

In addition, the Bill proposes capping existing ground rents at £250 per year, with these charges reducing to a peppercorn after 40 years.

RICS CEO, Justin Young, commented: “The announcement offers greater certainty and clarity on the Government’s proposed reforms to the leasehold system, including long-awaited action on ground rents. The publication of the draft Commonhold and Leasehold Reform Bill is a critical step in this process. RICS looks forward to working with members, MHCLG, and other key stakeholders to deliver the best outcomes for consumers and the market.”

Martin Boyd, chair of the Leasehold Advisory Service (LEASE), believes the Draft Commonhold and Leasehold Reform Bill marks a “significant milestone” for leaseholders and the “beginning of the end for the leasehold system as we know it”.

He explained: “The draft Bill tackles some of the most damaging features of leasehold, including high and escalating ground rents and the threat of forfeiture, which has left some leaseholders at risk of losing their homes over relatively small debts.

“More fundamentally, the Bill signals a decisive shift away from leasehold as the default form of home ownership. Moving towards commonhold, and making it easier for existing buildings to convert where leaseholders choose to do so, has the potential to give homeowners genuine control, security and long-term certainty over their homes. This draft legislation represents a significant step towards a fairer and more transparent system of home ownership.”

Andrew Bulmer, Chief Executive of The Property Institute, welcomes the publication of the Draft Commonhold and Leasehold Reform Bill.

“[The Bill] will give homeowners more control of the estates and communities they live in and reduce high and escalating ground rent costs for many leaseholders. These are important steps forward in improving the lives of homeowners in England and Wales.

“Commonhold will bring new responsibilities for homeowners, including building safety, financial governance, and upkeep of shared areas. Our members regularly work with residents who manage their own buildings – two thirds of the buildings TPI members manage are resident-controlled. We embrace the move to commonhold and stand ready to support future generations of commonholders to live in safe, well-managed homes.

“It is vital that common holders, as well as leaseholders, can rely on a professional and regulated property management sector to support them. We want to see Government also deliver on its commitment to mandatory qualifications, and to bring forth regulation of managing agents, to further improve outcomes for homeowners.

“Some of these reforms will be complex, and there will be important details to scrutinise, for example, on a replacement for forfeiture, to ensure buildings with arrears can continue to function. It is very positive that the Select Committee will first scrutinise a draft of the Bill with all stakeholders.

“For our members, these reforms will bring change as the sector adapts to commonhold, although most of our members already work directly for residents – more than half of the buildings they managed are resident owned-or controlled. The Property Institute is already developing guidance and qualification modules to support our members and will continue to engage with Government to ensure the new measure in the Bill are proportionate and practicable.”

But while some industry professionals welcome the new bill, others are sceptical and believe it does not go far enough.

Amber Krishnan-Bird, a  leasehold lawyer at Osbornes Law, said: “At first glance, this Bill is the leasehold revolution homeowners have been waiting decades for after years of misery under a broken system. Yet, dig a little deeper and it offers far less relief than many had hoped.

“For some these proposed changes will come as a huge relief but for others they do not go far enough. The government’s focus appears to be fully on commonhold and providing a new system rather than making any changes to the existing freehold/leasehold system, other than capping existing ground rent, which many freeholders and leaseholders are still likely to have for many years to come.

“The government says the ground rent cap may not being enforced until 2028 at the earliest and gives no timeframe for the rest of the legislation. In the interim many leaseholders will still be left be left facing difficult decisions over extending leases that are running out.”

National Leasehold Campaign (NLC) recognises yesterday’s announcements as “another nail in the coffin of the feudal leasehold system”.

Whilst NLC is disappointed at the UK government’s decision not to enforce peppercorn ground rents within the long‑awaited Leasehold and Commonhold Reform Bill the group acknowledges that the £250 cap will offer relief for leaseholders paying high ground rents. We recognise the benefits of establishing Commonhold as the default tenure for communal buildings and celebrate the removal of forfeiture.

“We have campaigned for peppercorn ground rents & an end to this abusive system for years” said Katie Kendrick, children’s nurse and co-founder of the National Leasehold Campaign. “Whilst today’s announcement on ground rents falls short of immediate peppercorn ground rents, this bill as a whole is another step forward in dismantling the leasehold system in England and Wales.”

The NLC says that the £250 cap will bring benefits for leaseholders currently trapped by unaffordable or doubling ground rent terms. The cap will ease financial pressures, bring and make properties easier to sell and remortgage — challenges that have plagued leaseholders under the existing system.

“The £250 cap will make a difference,” added Jo Darbyshire, NLC co-founder. “Particularly for people who bought new build properties in the last 20 years with punitive ground rents. And let’s remember that ground rent is a charge for no service. It’s money for nothing. It’s also encouraging that the government recognises that monetary ground rents must end. However, 40 years is an incredibly long time to wait for peppercorn ground rents.”

But whilst the banning of Ground Rents stole the headlines yesterday, NLC says it should not go unnoticed that the Leasehold and Commonhold draft bill published today will also abolish the draconian threat of forfeiture and consult on banning new leasehold flats.

Cath Williams, NLC co-founder stated: “Forfeiture is a tool we have seen used by unscrupulous freeholders to threaten leaseholders for debt as low as £350 making their lives a living hell. We are so pleased to see the end of this included in the draft Commonhold bill.”