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

Leasehold and commonhold: what is the difference?

If you own a flat in England or Wales, you almost certainly own it on a leasehold basis. This means you own the right to occupy the property for a fixed number of years — typically 99, 125, or 999 years when the lease is first granted — rather than owning the land and building outright. The freeholder (or landlord) owns the building itself and the land it stands on. As a leaseholder, you pay ground rent to the freeholder and a service charge towards the upkeep of shared areas.

Commonhold is a different form of ownership that has existed in law since 2002 but has been very rarely used in practice. Under commonhold, flat owners in a block each own their individual flat outright (as freehold) and collectively own the common areas through a Commonhold Association. There is no landlord, no ground rent, and no diminishing lease. The Commonhold and Leasehold Reform Bill is designed to make this system the default for new developments and to make it realistic for existing leaseholders to convert.

What the Bill actually changes

Landlord Today reported on 30 May 2026 that the Bill, now confirmed in the King’s Speech, contains several significant changes to the rights of existing leaseholders. The headline measures include:

• Ground rent cap: Ground rents will be capped at £250 per year. After 40 years from the date the cap takes effect, ground rents will reduce to a peppercorn (effectively zero). Leaseholders currently paying high or escalating ground rents could save £4,000 or more over the remaining lease term.
• Simplified conversion to commonhold: The existing rule requiring unanimous agreement among all leaseholders in a block before conversion can proceed will be replaced with a majority-vote threshold. This is a practical change — unanimity was almost impossible to achieve in larger blocks, which is why commonhold has rarely been adopted to date.
• Abolition of forfeiture: The current system allows a freeholder to forfeit (repossess) a leasehold property for breach of lease terms, including non-payment of service charges. This right — which can result in a leaseholder losing a property worth hundreds of thousands of pounds over a relatively small debt — will be abolished and replaced with a more proportionate enforcement scheme.

These changes are broadly positive for leaseholders. The ground rent cap in particular provides immediate financial relief for those currently subject to high ground rent demands. The forfeiture change removes a significant legal risk that has historically made some lenders reluctant to lend against leasehold properties with certain lease terms.

What this means for over-55 leaseholders and equity release

A significant proportion of Verity Home clients are over-55 leaseholders. Many own flats that were bought decades ago, often with long leases that have now shortened to 80, 70, or fewer years remaining. The interaction between leasehold law and equity release eligibility is an area where specialist advice matters.

The current position of most equity release lenders is that they require a minimum of 75 years remaining on the lease at the time of application, and in some cases more. A lease with fewer than 75 years remaining is a common reason for an equity release application to be declined or to require a lease extension as a condition of proceeding.

The Commonhold and Leasehold Reform Bill does not immediately resolve the short-lease problem for equity release. The ground rent cap and the forfeiture abolition are improvements to the leasehold framework, but they do not extend existing leases or change the years-remaining calculation that lenders apply. Leaseholders with shorter leases should not assume that the passage of the Bill means they will now qualify for equity release without further action.

However, the reforms are likely to have a positive longer-term effect on lender policy. A leasehold framework with capped ground rents, no forfeiture risk, and a clearer route to commonhold conversion is a lower-risk proposition for lenders. Over time, this may encourage lenders to revisit their minimum lease length requirements or to offer equity release on shorter leases at adjusted loan-to-value ratios.

The timeline: when do these changes take effect?

Full implementation of the Commonhold and Leasehold Reform Bill is not expected until 2028 or 2029. The legislative process involves further Parliamentary scrutiny, secondary legislation to fill in the procedural details, and a transition period for the property industry — including lenders, conveyancers, and managing agents — to adapt their systems and processes.

This matters for leaseholders considering equity release now. The benefits of the reforms are real, but they are prospective. A leaseholder with 68 years remaining on their lease who is considering equity release today cannot rely on the Bill to change their lender's current eligibility criteria. The 75-year minimum remains the standard applied in practice.

The practical options for short-lease leaseholders considering equity release include:

• Lease extension before applying: Extending the lease to 90 or 99 years (which resets the clock and removes the short-lease obstacle) is possible under existing legislation. The cost depends on the unexpired term and the property value, but it is a well-established route to equity release eligibility.
• Speaking to a specialist adviser now: Some lenders are more flexible than others on lease length, and eligibility can depend on factors beyond the years-remaining figure. An FCA-regulated adviser with experience in leasehold equity release can identify which lenders are most likely to consider a given property and set of circumstances.
• Waiting for reform implementation: For leaseholders whose need for equity release is not urgent, waiting for the 2028–2029 implementation window and the subsequent shift in lender policy may produce better terms. However, this involves accepting the risk that rates or personal circumstances change in the meantime.

Equity release is available on many leasehold flats today. A short lease is a complication, not necessarily a barrier, depending on the specific circumstances.

Further reading: Equity release on leasehold flats, Equity release eligibility, Lifetime mortgages explained

How reform may affect the value of leasehold flats

Property values for leasehold flats are affected by lease length, ground rent levels, and the broader perceived risk of leasehold ownership. The reforms address all three of these factors to varying degrees.

Capping ground rents removes one of the most significant deterrents that has depressed values for some leasehold properties in recent years. During 2019–2022, properties with onerous ground rent clauses — those doubling every ten years, for example — became effectively unmortgageable as major lenders declined to lend against them. The cap provides a clear ceiling that restores mainstream lendability for those affected.

For equity release purposes, a higher surveyed property value means a larger maximum release. If reform causes leasehold flat values to recover or improve relative to freehold equivalents, this could increase the amount that over-55 leaseholders could release. This effect will take time to materialise and will not be uniform across the market, but it is a reasonable expectation over the medium term.