By extension.lease – Experts in lease extensions and freehold purchase
What has been announced, what has not changed, and what leaseholders should realistically expect
The UK Government has published the Draft Commonhold and Leasehold Reform Bill, prompting widespread discussion about lease extension reform, ground rent caps, and the future of leasehold ownership in England and Wales.
For many leaseholders particularly those considering a statutory lease extension or already working with a lease extension solicitor, the key question is whether these proposals will reduce costs or change the timing of extending a lease.
This guide explains what the draft Bill proposes, what stage it is at, and what it realistically means for leaseholders today.
A Draft Bill, Not a Change to Lease Extension Law
Despite some media headlines, it is important to be clear:
there has been no change to lease extension law.
The Draft Commonhold and Leasehold Reform Bill has been published for consultation and pre-legislative scrutiny. Before any reforms take effect, the Bill must still:
- complete the consultation process,
- pass through both Houses of Parliament,
- potentially be amended, and
- be supported by secondary legislation.
The Government has indicated that implementation may not occur until late 2028, meaning any lease extension reform remains several years away and subject to change.
What Does the Draft Bill Actually Propose?
The draft Bill focuses on reforming tenure structures rather than directly altering the statutory lease extension framework. Its key proposals include:
1. Commonhold Reform and the Future of Leasehold
The Bill seeks to encourage greater use of commonhold by:
- making it easier for existing leaseholders to convert to commonhold if they wish, and
- banning the use of leasehold for most new flats from a future date.
A Government consultation on commonhold runs until 24 April 2026. Importantly, conversion would not be automatic, leaseholders would retain control over whether to pursue commonhold.
2. Proposed Ground Rent Cap on Existing Leases
One of the most discussed elements of the Bill is the proposal to:
- introduce a ground rent cap of £250 per year on existing residential leases, and
- reduce ground rent to a peppercorn after 40 years.
While this has been widely reported as an immediate benefit to leaseholders, the reality is more cautious:
- the ground rent cap is not law,
- it does not apply today, and
- it does not currently affect lease extension valuations.
Any changes remain subject to consultation, parliamentary scrutiny, and potential legal challenge.
3. Estate Rentcharges and Enforcement Powers
The draft Bill also proposes repealing certain enforcement powers linked to estate rentcharges on freehold estates, addressing concerns about disproportionate remedies affecting homeowners.
Professional and Legal Context
Professional bodies, including the Association of Leasehold Enfranchisement Practitioners (ALEP), have broadly welcomed the publication of the draft Bill as an important step towards modernising property ownership.
However, practitioners have emphasised that lease extension reform must be balanced, legally robust, and workable in practice. Key concerns include:
- Retrospective change to existing leases, which may interfere with contractual rights.
- Human Rights considerations, particularly under Article 1 of Protocol 1 of the European Convention on Human Rights.
- Practical implementation challenges, especially when applied across millions of existing leasehold homes.
These issues help explain why reform is expected to take time and why outcomes remain uncertain.
What Does This Mean for Lease Extensions Right Now?
For leaseholders considering a statutory lease extension, or already working with a lease extension solicitor or valuer, the position today is unchanged:
- Lease extensions are still governed by existing legislation.
- Premiums are calculated using the current statutory valuation framework.
- The draft Bill does not reduce lease extension premiums.
- There is no immediate ground rent cap affecting existing leases.
Delaying a lease extension in anticipation of reform can introduce risk, as lease length continues to reduce over time often increasing the eventual premium.
For many leaseholders, proceeding under the current, well-established lease extension regime remains the most predictable and controllable option.
Looking Ahead: Lease Extension Reform in Context
The Draft Commonhold and Leasehold Reform Bill represents a potentially significant long-term shift in how flats are owned and managed in England and Wales. However, it remains at an early stage, and meaningful change if it comes, is likely to take several years.
At extension.lease, we continue to monitor:
- developments in lease extension reform,
- the proposed ground rent cap and consultation outcomes,
- parliamentary scrutiny of the draft Bill, and
- legal challenges that may affect implementation.
In the meantime, leaseholders should continue to seek advice based on current law, not uncertain future reform.
Lease Extension Reform: FAQs
Has lease extension law changed?
No. The draft Bill does not change statutory lease extension rights.
Is there a ground rent cap in force?
No. The proposed £250 ground rent cap is not yet law.
Will this reduce my lease extension premium?
Not under current legislation. Premiums are assessed using existing valuation principles.
Should I delay extending my lease?
In most cases, delaying increases uncertainty and allows the lease to shorten, which can increase costs.
Do I still need a lease extension solicitor?
Yes. Lease extensions remain a legal process requiring specialist advice under current law.
When could lease extension reform take effect?
The Government has suggested implementation may not be until late 2028, subject to parliamentary approval.
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