Committee publication · Report · 27 May 2026 · HC 40

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 report presents the Housing, Communities and Local Government Committee's pre-legislative scrutiny of the draft Commonhold and Leasehold Reform Bill (January 2026), which aims to reform England and Wales's leasehold system for 5 million homeowners. The Committee finds the bill represents significant progress but requires amendments before parliamentary introduction, particularly on ground rent transition periods, managing agent regulation, commonhold conversion defaults, and enactment of outstanding Law Commission recommendations.

Key findings

The £250 ground rent cap is welcome, but the government has not justified why a 40-year transition to peppercorn rent is necessary over a shorter 20-year period; the Committee recommends the cap take effect one year earlier (late 2027)
Regulation of property managing agents with enforcement powers is essential; the final bill must include an independent Regulator with authority to sanction and remove rogue agents, particularly to protect leaseholders unable to convert to commonhold
The bill establishes a modern commonhold framework but must make conversion the default outcome of collective enfranchisement to streamline the process and align with government objectives
Law Commission recommendations on leasehold enfranchisement and right to manage processes are entirely missing from the draft; their omission risks making commonhold unaffordable and unattainable for existing leaseholders
Shared ownership provisions lack clarity on voting rights during the 10-year initial repair period; the bill must urgently clarify that shared owners retain voting rights, not ceding control wholly to providers

Recommendations

Provide evidence justifying the 40-year ground rent transition period or adopt a 20-year alternative
Advance the commencement date for the £250 ground rent cap to late 2027 (one year earlier than current timeline)
Establish an independent Regulator of property managing agents with powers to impose penalties including licence removal
Make conversion to commonhold the default outcome of a collective enfranchisement to streamline the process
Enact all outstanding Law Commission recommendations on leasehold enfranchisement and right to manage procedures (detailed in the report's Appendix)
Amend the bill to clarify that shared owners and their providers share the property's vote during the initial repair period, preventing shared owners from being excluded from decision-making
Introduce proposed drafting changes set out in Annex 1 to improve technical clarity
Make final amendments before autumn 2026 parliamentary introduction to meet leaseholder expectations and manifesto commitments

Tone

Critical

Topics

leasehold-reformground-rentcommonholdproperty-managementhousing-policy

Key actors

Florence Eshalomi, Matthew Pennycook MP, Caroline Crowther, Rachel Rayner, Law Commission, Competition and Markets Authority, Leasehold Advisory Service, Ministry of Housing, Communities and Local Government

Notable line

“The final bill must therefore include provisions for an independent Regulator with proper teeth which will sanction rogue agents with penalties, including removal of their licence to operate.”

Key Quotes

“We welcome that the draft bill will cap these charges at £250 per year for all existing leaseholders. However, 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 · Assessing the ground rent cap provisions

“For many leaseholders, the lack of control over faceless managing agents is among the most frustrating and unjust aspects of the leasehold system.”
— Housing, Communities and Local Government Committee · On the need for managing agent regulation

“We are concerned, however, that several vital recommendations previously made by the Law Commission are entirely missing from the draft bill. These measures, which the government's manifesto promised to enact, would make it easier and more affordable for existing leaseholders to convert to commonhold.”
— Housing, Communities and Local Government Committee · On missing Law Commission recommendations

“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 for 125 years or more, notwithstanding that a substantial premium had been paid on purchase.”
— Competition and Markets Authority · Describing problematic modern leasehold ground rent structures

“The government has said that this legislation will "bring the feudal leasehold system to an end", which has raised high expectations among leaseholders of what these reforms will achieve.”
— Housing, Communities and Local Government Committee · On meeting leaseholder expectations set by government rhetoric

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

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Source · parliament.uk record ↗