On 27 January 2026, the Government published the draft Commonhold and Leasehold Reform Bill for consultation. The Bill represents a significant step towards delivering Labour’s manifesto commitment to “finally bring the feudal leasehold system to an end”, proposing a fundamental shift away from leasehold ownership towards commonhold for flats in England and Wales.
The draft Bill has not yet been formally introduced to Parliament. It has been published to enable consultation, which is open until 24 April 2026.
While the Government’s objectives are clear, the proposals raise material issues for insurers around governance, risk pooling, professional management, solvency, insurability and transition arrangements. Many of the most critical questions for the insurance market are not resolved on the face of the draft Bill and are likely to be shaped through consultation responses, secondary legislation and guidance.
Keoghs has been actively engaging with parliamentarians and officials on these issues and has convened a parliamentary roundtable on 9 February, sponsored by Gideon Amos, bringing together representatives from across the insurance market to explore the implications of the reforms in more detail.
The draft Bill is also subject to pre-legislative scrutiny. Government has asked the Housing, Communities and Local Government (HCLG) Select Committee to assess whether the proposed reforms will be effective and what changes could improve the Bill before formal introduction to Parliament. This process is likely to influence the final legislative shape and timing of reform.
1. Ban on new leasehold flats
The draft Bill proposes that leasehold will be banned “except in limited cases”, with developers no longer permitted to sell new flats on a leasehold basis. Instead, new flats would be sold as commonhold, with unit owners collectively owning the building and the land on which it stands.
The consultation closes on 24 April and seeks views on:
The pre-legislative scrutiny process commenced on 27 January 2026. The HCLG Select Committee launched a formal inquiry on 4 February and will begin oral evidence sessions from March 2026. The Committee is expected to publish a report later in Spring 2026 setting out conclusions and recommendations to Government ahead of the Bill’s introduction.
Commonhold is a form of freehold ownership in which:
The key governing document is the Commonhold Community Statement (CCS), which defines rights, obligations, maintenance responsibilities and financial arrangements.
Under existing legislation, a commonhold is already required to hold buildings insurance. The draft Bill goes further by:
The Bill also anticipates the use of reserve funds, intended to mitigate large or unexpected costs and support the long-term solvency of the CA.
These provisions are broadly welcomed, but key questions remain unanswered, including how reserve fund adequacy will be assessed, monitored and enforced in practice.
Drawing on recent engagement with parliamentarians and officials, several themes emerge as critical for the insurance market.
(a) Loss of portfolio advantage and risk pooling
Under the current leasehold model, professional managing agents frequently place insurance across portfolios, allowing risks to be pooled and weaker risks to be absorbed.
A shift to building-by-building procurement under commonhold risks:
The draft Bill does not currently address whether any form of structured pooling or aggregation mechanism will be supported, which may have implications for market capacity and affordability.
Managing agents currently play a critical role in:
Under commonhold, decision-making responsibility is likely to sit with volunteer directors of Commonhold Associations, who may lack equivalent technical expertise. This raises concerns around mis-disclosure, underinsurance and claims handling delays.
(c) Governance standards and the question of regulation
There has been informal discussion around the potential creation of a regulator for Commonhold Associations, drawing on the recommendations of Lord Best in his 2019 Regulation of Property Agents report.
Neither the draft Bill nor the consultation currently proposes a new statutory regulator for Commonhold Associations, and this appears consistent with Labour’s broader reluctance to introduce additional regulators unless clearly justified.
There is concern that creating a new regulator could replicate the operational delays experienced under the Building Safety Regulator, with adverse consequences for claims resolution, reinstatement works and resident displacement following major losses.
(d) Insolvency and insurer recourse
The draft Bill does not yet address how claims should be handled if a Commonhold Association becomes insolvent following a major insured loss, or whether insurers would have recourse against individual unit holders.
Alongside the Government consultation, the HCLG Select Committee is undertaking a short inquiry as part of pre-legislative scrutiny. It is inviting leaseholders and homeowners who pay private estate charges to complete an online survey, with responses informing its report to Government. Extracts from submissions may be referenced anonymously.
This process represents an additional opportunity for the insurance market and affected stakeholders to shape the final form of the legislation before it is introduced to Parliament.
The insurance industry has a critical role to play in shaping a workable and insurable commonhold framework. We will be responding to the current consultation and will share our draft response with clients once available.
If you would like to discuss the implications of the draft Bill or contribute to our ongoing engagement with Government, please contact:
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