Committee publication · Report · 27 May 2026 · HC 40

Large Print - 1st Report - Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill

From: Housing, Communities and Local Government Committee

Inquiry: Pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill

Government response deadline: 27 July 2026

Summary

This is the Housing, Communities and Local Government Committee's pre-legislative scrutiny report on the government's draft Commonhold and Leasehold Reform Bill, published 27 May 2026. The committee concludes the bill would significantly advance leasehold reform but requires amendments before parliamentary introduction in autumn 2026, particularly on ground rent cap justification, property management regulation, commonhold conversion defaults, and Law Commission recommendations implementation.

Key findings

The £250 annual ground rent cap is welcomed, but the committee questions the 40-year transition to peppercorn rent and recommends evidence justifying this over a 20-year period; the cap could commence late 2027, one year earlier than planned.
Regulation of property managing agents is essential; the final bill must include independent regulator powers with enforcement teeth to sanction rogue agents and remove operating licences.
Conversion to commonhold should become the default outcome of collective enfranchisement to streamline the process and better promote commonhold as the preferred tenure for flat blocks.
The draft bill omits vital Law Commission recommendations on enfranchisement and right-to-manage that would reduce conversion costs and barriers; these must be enacted to prevent commonhold becoming unattainable for trapped leaseholders.
Shared ownership homeowners' voting rights in commonhold associations during the 10-year initial repair period must be clarified by amendment; shared owners must not be excluded from decisions affecting their properties.

Recommendations

Provide further evidence justifying the 40-year transitional period to peppercorn ground rent against a potentially fairer 20-year alternative.
Bring the £250 ground rent cap into force in late 2027 rather than late 2028.
Include in the final bill provisions for an independent Regulator with statutory powers to sanction underperforming property managing agents, including licence removal.
Amend the final bill to make conversion to commonhold the default outcome of collective enfranchisement, streamlining the conversion process.
Enact all outstanding Law Commission recommendations on leasehold enfranchisement and right to manage to reduce costs and complexity.
Clarify shared ownership voting rights in commonhold associations by amendment to allow shared owners and providers to share property votes during the initial repair period.
Include proposed drafting changes set out in Annex 1 of the report.
Introduce the final bill in autumn 2026 to enable parliamentary scrutiny and passage during this session.

Tone

Critical

Topics

housing-policyproperty-lawconsumer-protectionland-reformregulation

Key actors

Florence Eshalomi (Committee Chair), Matthew Pennycook MP (Minister of State for Housing and Planning), Ministry of Housing, Communities and Local Government, Law Commission, Competition and Markets Authority, Leasehold Advisory Service

Notable line

“… developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit.”

Key Quotes

“… too often leaseholders, particularly in new-build properties, have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit. The balance of power in existing leases, legislation and public policy is too heavily weighted against leaseholders, and this must change.”
— Housing, Communities and Local Government Committee (predecessor committee, quoted in report) · On the historical imbalance of power in leasehold relationships

“We had a particular concern with so-called "modern leaseholds" that emerged in the 2000s, where ground rent often doubled periodically or increased by RPI in leases that normally lasted 12 Law Commission, Leasehold home ownership: buying your freehold or extending your lease , HC”
— Competition and Markets Authority · On problematic modern leasehold ground rent structures

“"saw no persuasive evidence that consumers receive anything in return" for ground rent.”
— Competition and Markets Authority · On the lack of commercial justification for ground rent payments

“… it is not clear to us why the government has decided that a 40-year transitional period before a change to zero ground rent is the most justified and fair policy.”
— Housing, Communities and Local Government Committee · On the committee's concern regarding the proposed transitional period length

“For too long, some of the biggest professional managing agents have got away with delivering appalling standards of service, because they have operated in the interests of freeholders as their clients, rather than the leaseholders who pay rising bills for their services.”
— Housing, Communities and Local Government Committee · On the failure of property management regulation

“Shared owners must not be shut out of decisions which directly affect them.”
— Housing, Communities and Local Government Committee · On voting rights for shared ownership homeowners in commonhold associations

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Source · parliament.uk record ↗