Commonhold Reform 2026: What It Means for Equity Release on Leasehold Flats

What the Commonhold and Leasehold Reform Bill actually does

The Bill received confirmation in the King's Speech on 17 May 2026. It is substantive, binding legislation — not a consultation paper or a manifesto commitment. The key provisions relevant to equity release are:

• Ground rent cap: Ground rents for existing leases will be capped at £250 per year, reducing to a peppercorn after 40 years. New leases may not be granted at more than a peppercorn.
• Forfeiture reform: The current forfeiture system — under which leaseholders can lose their home over debts as low as £350 — will be replaced with a court-supervised process. This removes a major risk that has made some lenders reluctant to lend on leasehold properties.
• Commonhold conversion threshold: The requirement for unanimous leaseholder consent to convert a building to commonhold drops to 50% of qualifying leaseholders. This makes conversion genuinely achievable for the first time.
• Lease extension rights: Leaseholders will have stronger and faster routes to extending leases, with reduced costs relative to the current tribunal-heavy system.

Full implementation is expected around 2028. In the meantime, current lending decisions are still made under existing leasehold rules, which is why specialist advice is important now.

Why leasehold tenure has historically blocked equity release

Equity release lenders — whether offering lifetime mortgages or home reversion plans — need confidence in the long-term security of the property as collateral. Leasehold tenure has created specific problems:

• Minimum lease term requirements: Most equity release lenders require a minimum of 75 to 90 years remaining on the lease at the point of application. A flat with 70 years left, for example, is often simply ineligible — regardless of its market value or the owner's personal circumstances.
• Onerous ground rents: Ground rents that double periodically, or that are set at levels above market norms, have been treated by lenders as a risk to the property's mortgageability and resale value. The £250 cap removes this concern for most existing leases.
• Forfeiture risk: A leaseholder who loses their home over a relatively small debt creates a genuine risk of loss of security for a lender. The new court-led process significantly reduces this risk and is expected to make lenders more willing to lend on leasehold flats.

The reform addresses each of these concerns directly. Whether it results in more lenders offering equity release on previously excluded properties will depend on how individual institutions update their criteria — and that process takes time.

Equity release within commonhold structures

As more buildings convert to commonhold, a new question arises: can equity release be arranged on a commonhold flat? The answer is yes, where appropriate voting safeguards are in place within the commonhold association's constitution.

Commonhold removes many of the lease-related risks that have historically deterred lenders. There is no diminishing lease term, no ground rent, and no forfeiture. For lenders, the security can actually be cleaner than a long-lease leasehold flat in certain respects.

However, commonhold associations are governed by rules that affect what owners can do with their units. A lender providing a lifetime mortgage on a commonhold flat will want to review the association's commonhold community statement before approving a loan. Not all commonhold structures will be compatible with all equity release products from the outset.

Verity Home works with advisers who understand both the equity release market and the evolving legal landscape around commonhold. Where a conversion is under consideration, early specialist advice is valuable.

What this means if you own a leasehold flat today

If you own a leasehold flat and have previously been told equity release is unavailable — because of a short lease, a high ground rent, or a lender's general reluctance to lend on leasehold — it is worth keeping the reform timeline in mind.

A few practical points:

• If your lease has fewer than 80 years remaining, the cost of extending it rises significantly. Acting before it falls below that threshold — and before equity release becomes an active need — is generally advisable.
• The ground rent cap does not retrospectively eliminate historic ground rent obligations overnight. The transition to peppercorn over 40 years means existing lenders will apply their own criteria during the transition period.
• The forfeiture reforms are expected to be implemented in stages. Lender policy changes typically lag behind legislative change by at least 12 to 18 months as institutions update their internal underwriting criteria.
• Full reform of the system, including widespread commonhold conversion, is expected around 2028. Planning ahead — rather than waiting until a financial need is urgent — puts you in a stronger position.

A specialist equity release adviser could review your specific property's lease terms, lender eligibility, and options under the current rules, with one eye on what the reform is expected to make available in due course.

FCA-regulated advice remains essential

Equity release is a regulated financial product. Any recommendation to take out a lifetime mortgage or home reversion plan must be made by an FCA-regulated adviser. The legislative changes described here affect the range of properties on which equity release could release funds — they do not remove the need for careful, personalised advice before any decision is made.

The Equity Release Council's standards require that any lifetime mortgage includes a no-negative-equity guarantee, ensuring you will never owe more than the value of your home. These protections remain in place regardless of the tenure reforms.

Verity Home provides FCA-regulated advice for homeowners aged 55 and over. We will assess your property, your lease terms, the current lender market, and your personal and financial circumstances before making any recommendation. There is no obligation to proceed, and no cost for an initial assessment.