The UK Government has released the Draft Commonhold and Leasehold Reform Bill, a landmark proposal aiming to reshape how homes, particularly flats, are owned in England and Wales.
For homeowners and buyers across Hackney, Stoke Newington, and East London, where leasehold flats are common, this reform could bring more clarity, control, and affordability to the property market.
Whether you already own a flat, or you’re in the process of buying one, here’s what you need to know about the changes, timelines, and what it all means for you.
Key Proposals in the Draft Bill
- Ban on most new leasehold flats
- Easier conversion from leasehold to commonhold
- Cap on existing ground rents (£250, reducing to peppercorn)
- Forfeiture abolished and replaced with fairer court-based enforcement
- Updated commonhold framework for mixed-use and large developments
Why It Matters in Hackney & Stoke Newington
Across N16, E5, E8, and nearby postcodes, a huge proportion of homes, especially period conversions and new-build flats, are leasehold.
That means:
- Service charges
- Ground rents
- Lease lengths
- Delays in sales and legal complications
These proposals aim to level the playing field, simplify ownership, and make leasehold less of a legal and financial minefield for everyday Londoners.
What’s Commonhold, and How’s It Different?
The Bill proposes a major overhaul of commonhold ownership, an alternative to leasehold that gives flat owners full ownership of their unit, plus shared responsibility for the building.
Commonhold vs Leasehold:
Leasehold
- You own your flat for a set number of years (usually 99 to 125)
- You pay ground rent and service charges to a freeholder
- The freeholder or managing agent typically controls building decisions
- You may need permission to make changes to your home
- Lease length impacts your property value and ability to sell or remortgage
Commonhold:
- Commonhold offers more security, control and transparency
- You own your flat outright, with no time limit
- You jointly own and manage shared parts of the building with other owners
- No ground rent is charged
- Everyone has a say in how the building is run
Under current law, converting to commonhold is near-impossible for existing buildings, it requires 100% agreement from owners. The new bill removes that barrier, opening the door to wider adoption.
Ban on New Leasehold Flats
The Bill proposes a ban on granting most new long residential leases of flats, with exceptions for:
- Shared ownership homes
- Community-led housing
- Retirement housing (subject to review)
Instead, new flats would default to commonhold.
This is a significant change for developers, but potentially good news for future buyers, who’ll enjoy more secure, fairer ownership structures.
Ground Rent Cap: What’s Changing?
The Leasehold Reform (Ground Rent) Act 2022 already banned ground rents on new leases. This new bill goes further, tackling existing leases too.
- Ground rents will be capped at £250/year
- After 40 years, they drop to a peppercorn rent (effectively zero)
- Certain leases (like those extended with reduced premiums in exchange for high ground rents) may be excluded from the cap
Current estimates suggest 770,000 to 900,000 leaseholders pay more than £250 annually in ground rent, making this a targeted, but meaningful intervention.
Leasehold = Slower Sales: Here’s Why It Matters
If you’re selling a flat in Hackney or Stoke Newington, here’s a reality we often face: leasehold sales are slower.
Common causes of delay include:
- Waiting for managing agent packs
- Chasing the freeholder for information or permissions
- Legal delays over lease terms or extensions
These delays often lead to fall-throughs in chains or buyers pulling out.
The proposed reforms, especially simplifying lease structures and moving toward commonhold, could significantly speed up transaction times and boost buyer confidence.
Abolishing Forfeiture: More Protection for Flat Owners
Currently, if a leaseholder breaks the terms of their lease, such as missing payments, the freeholder can take back possession of the property. This is called forfeiture.
The Bill proposes:
- Abolishing forfeiture for long residential leases
- Replacing it with a fairer, court-based enforcement process
For many London flat owners, this offers a much-needed layer of protection.
What Is ‘Marriage Value’ – and Why Are People Talking About It?
Marriage value is the increase in a property’s value when a lease is extended, and under current law, leaseholders with under 80 years remaining must split that uplift 50/50 with the freeholder.
That can cost tens of thousands of pounds, especially in high-value areas like Stoke Newington.
The Government plans to abolish marriage value altogether, but this isn’t confirmed in the current draft. It may be addressed in future legislation.
Should You Extend Your Lease Now or Wait?
If you’re a leaseholder in London with a short lease (especially under 85 years), you may be wondering:
“Should I extend now, or wait for the reforms?”
Here’s a sensible way to think about it:
- If you’re selling soon or need mortgage eligibility: extend now
- If you can wait, and are above 80 years: you may benefit from lower costs later
- But: reforms are still in draft, with no start date or legal guarantees
Always speak with a lease extension valuer or solicitor before making a decision.
Final Thoughts: What Buyers and Owners Should Do Now
The draft bill signals a big shift in how homes are owned, especially flats, across Hackney and East London. But while it’s promising, it’s not law yet.
For homeowners:
- Review your lease, especially the term and ground rent
- Consider lease extension options if your lease is under 85 years
- Be proactive if you plan to sell in the next 12–18 months
For buyers:
- Ask about the lease: length, ground rent, restrictions
- Don’t be afraid to walk away from a flat with an onerous lease
- Stay informed, reforms could make commonhold more common in future
