The Draft Commonhold and Leasehold Reform Bill, published in January 2026, is the clearest signal yet that the way flats are owned and managed in England and Wales is set to change over the long term.

For managing agents, block managers, property managers and service charge accountants, the most important question is not whether leasehold is “ending tomorrow” (it isn’t), but how expectations around governance, transparency and evidence are shifting — and what that means for day-to-day management.

This blog explains what the Bill proposes, what it doesn’t, and how to think about it in practical terms.

Quick Summary

1. The Bill is draft legislation, not law yet

2. Leasehold continues for existing buildings

3. Commonhold is being rebuilt to work properly at scale

4. The biggest shift is how decisions are governed and evidenced, not how service charges are calculated

5. Managing agents remain central but scrutiny will increase

What this Bill is (and what it isn’t)

The Draft Commonhold and Leasehold Reform Bill is a Command Paper, published for pre-legislative scrutiny. In plain English, that means it is a fully developed proposal that the government expects Parliament to examine and refine so not an early ideas document and not yet binding law.

Nothing in the Bill changes property management practices immediately. Existing leasehold buildings continue to operate under current law, and many of the proposed reforms rely on future secondary legislation before they could take effect.

However, the direction of travel is clear and settled. The government is signalling that leasehold is no longer considered a sustainable long-term model for flats, and that commonhold is intended to become the preferred form of ownership over time. This aligns with the government’s broader direction in recent policy, including its Commonhold White Paper (2025). 

Why the government is reforming leasehold

Leasehold has been criticised for years for creating tension between owners, landlords and managing agents. Issues around ground rent, opaque charges, weak consumer confidence and the threat of forfeiture have all contributed to calls for reform.

The Bill aims to strengthen consumer protections for existing leaseholders, remove extreme enforcement powers, and replace leasehold with a fairer, owner-led system for future developments.

This builds on earlier reforms already introduced in recent years, but goes much further by attempting a structural reset of how flats are owned and governed.

Commonhold: from theory to something workable

Commonhold is not new. It has existed in law for over two decades, but in but in practice it has barely been used by England and wales. The reason is simple: the original framework struggled with the real-world complexity.

The draft Bill tackles this by rebuilding the commonhold system so it can cope with mixed-use developments, large or phased sites, and modern ownership structures.

Rather than simply encouraging commonhold, the Bill introduces detailed rules around governance, budgeting, dispute resolution and conversion from leasehold. This signals a clear intent to make commonhold operational at scale, not just an idealised alternative.

For managing agents, this points to a future where owner-led governance becomes more common, even if professional management remains essential.

Budgets and governance: where expectations really shift

One of the most important aspects of the draft Bill is the emphasis on formal budget approval and governance within commonhold.

Budgets are no longer something that is simply consulted on and then set. They are expected to be approved through member processes, with mechanisms for revision if proposals are rejected.

In practice, this doesn’t radically change how good agents already build budgets. What it does change is the standard of explanation expected. Assumptions, increases and allocations are more likely to be questioned, and the ability to show how decisions were reached becomes critical.

This is less about control shifting away from agents, and more about accountability becoming more visible.

Reserve funds: from best practice to baseline expectation

Under the reformed commonhold framework, reserve funds become mandatory, with clearer rules about their purpose, use and protection.

For block managers and service charge accountants, this won’t feel alien. Reserve planning already exists as best practice in many buildings. What changes is that it becomes a formal requirement rather than an optional discipline.

In practical terms, this means earlier conversations with owners about long-term maintenance, more emphasis on forecasting rather than reaction, and greater scrutiny of how reserve levels are set and used.

The trade-off is fewer emergency demands but more expectation that planning is visible and defensible.

Service charges: familiar mechanics, sharper scrutiny

Despite the scale of the reform, the financial mechanics remain largely familiar. Service charge style contributions, percentage allocations and shared costs all continue to exist under the new framework.

The real shift is not in the maths, but in fairness and explainability.

The Bill introduces more structured ways to ensure costs align with benefit, particularly in complex or mixed-use buildings. For agents, this means allocation logic that may once have gone unchallenged is more likely to be examined — by owners, auditors or tribunals.

Good practice today becomes expected practice tomorrow.

Enforcement without forfeiture: evidence matters more

One of the most significant proposed changes is the abolition of forfeiture for long residential leases, replaced with a court-controlled enforcement model.

This doesn’t remove the ability to pursue arrears or breaches, but it does shift the emphasis firmly towards proportionate remedies, clear escalation processes, and well-documented communication.

For managing agents, this reinforces the importance of clean arrears histories and decision trails. When disputes escalate, the quality of the record becomes a form of protection for everyone involved.

Converting leasehold blocks to commonhold

Historically, conversion from leasehold to commonhold has been practically impossible because it required unanimous consent. The draft Bill proposes reducing this threshold to 50%, while allowing non-consenting leaseholders to remain temporarily and be phased out over time.

This makes conversion a realistic discussion for some buildings — not necessarily an immediate decision, but a genuine option. It also means managing agents may increasingly find themselves supporting hybrid arrangements, where leasehold and commonhold coexist.

Clear records, consistent communication and strong financial histories become even more important in those scenarios.

What doesn’t change (and why that matters)

It’s worth being explicit. The Bill does not end leasehold overnight, remove the need for managing agents, or replace service charges with something unfamiliar.

Day-to-day block management continues much as it does today. The change is in the expectation of transparency, governance and evidence, not in the fundamentals of the role.

A note for Propman users

We don’t believe property management needs more complexity. It needs clarity and confidence, especially when regulation evolves.

This draft Bill reinforces a direction the sector is already moving in: clearer governance, stronger audit trails, and decisions that can be explained without defensiveness.

Propman is already designed to support that reality helping teams structure service charge data, maintain clear records, and evidence decisions when questions arise. Nothing needs to change today because of this draft legislation, but having the right foundations in place makes adapting far easier when reform does arrive. We will be folllowing the legislation closely to ensure we can support you through future changes. 

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