Leasehold Reform 2026 and Equity Release: What Flat Owners Need to Know

What the Commonhold and Leasehold Reform Bill 2026 does

The Bill was confirmed in the King's Speech in May 2026, signalling it is a legislative priority for the current Parliament. The key measures include:

• Ground rent cap: Ground rents for existing leaseholders will be capped at £250 per year. The longer-term target is a peppercorn ground rent (effectively zero), expected from late 2028.
• Commonhold for new flats: All new flats will be sold as commonhold rather than leasehold. Commonhold is the freehold-equivalent form of individual flat ownership used across much of Europe and Australia — each owner holds their unit outright, without a lease that counts down over time.
• Expanded conversion rights: Existing leaseholders will gain expanded rights to convert to commonhold, though the precise mechanism and costs are still being worked through in the Bill's passage.

Law firm Baker McKenzie, analysing the proposals in March 2026, described the shift to commonhold as "a transformational shift in property ownership in England and Wales" — the most significant change to residential tenure law in generations.

Why lease length matters so much for equity release

Equity release lenders are cautious about leasehold properties, and lease length is the key variable. The standard industry requirement is that a lease must have at least 75 years remaining at the time of application — and many lenders require more. Some prefer 85 or even 90 years to ensure there is sufficient term remaining over the expected life of the loan.

A lease that starts at 125 years when a flat is first sold can look comfortable. But as decades pass, that term counts down. A flat owner in their 60s who bought 30 years ago may now have only 90–95 years remaining — approaching the range where some lenders begin to apply restrictions. A flat owner in their 70s who bought 40 years ago may have 80–85 years left, with fewer lenders willing to lend at all without a lease extension first.

A lease with fewer than 75 years remaining will typically need extending before equity release becomes possible. Lease extension costs vary depending on the unexpired term, the property value, and the ground rent — but they can run into tens of thousands of pounds for shorter leases.

The important counterpoint is that extending a lease increases the property's value and substantially improves its mortgageability and saleability. The cost of extension is generally recovered through the improvement in property value.

What commonhold means for equity release in the long run

For new flats sold under the reformed system, commonhold ownership is perpetual — there is no lease term counting down, no risk of the property becoming a depreciating asset as the lease shortens, and no ground rent. Equity release lenders are broadly comfortable lending on freehold and commonhold properties.

For existing leaseholders, the reforms are positive in direction but years away from full implementation. Conversion rights are still being defined. The peppercorn ground rent target is late 2028 at the earliest. Full implementation of the Bill's provisions will take several years after Royal Assent.

Existing leaseholders who are considering equity release should make decisions based on the rules as they stand today — not on the basis of future reforms that have not yet taken effect. If your lease has fewer than 75 years remaining, that constraint applies now, regardless of what the law may look like in 2030.

Can leaseholders access equity release in 2026?

Yes — if the lease has sufficient term remaining. Despite some market softness in 2026, property values in most parts of the country still support meaningful equity release for homeowners with enough equity and a qualifying lease.

Not all equity release providers lend on leasehold properties, and those that do each have their own minimum lease length requirements and criteria. Some lenders may also apply conditions around service charge levels, management company arrangements, or building type. Getting the right match between your property and a suitable lender requires specialist knowledge of the market.

Verity Home can identify the providers who lend on leasehold flats, check your lease length against current lender criteria, and match you with the product best suited to your circumstances.

Learn more: Equity release explained, Equity release on leasehold property, Lifetime mortgages