Understanding LFRA in 2026 and Its Growing Impact on Property Management
Introduction
The UK property landscape is undergoing major transformation. Since the Leasehold and Freehold Reform Act (LAFRA/LFRA) came into force on 24th May 2024, the pace of legislative change has continued to accelerate. Most recently, on 27th January 2026, the government published a draft of the Commonhold & Leasehold Reform Bill, aimed at improving the commonhold framework. The shift from leasehold to commonhold is gaining momentum, bringing the UK more in line with property ownership models used across Europe and beyond.
LFRA is already impacting leaseholders, landlords, developers, freeholders, and property management companies throughout the UK, and its influence will only grow in the coming years.
What is LFRA?
The Leasehold and Freehold Reform Act is landmark legislation designed to empower leaseholders and create a fairer property market.
Some of its main objectives include:
Making it simpler and more affordable for leaseholders to buy their freehold
Improving transparency and accountability in service charges
Supporting a gradual shift away from leasehold towards commonhold ownership
Alongside LFRA, the Commonhold White Paper sets out measures to strengthen governance standards within Commonhold Associations.
Since its introduction in 2002, commonhold has seen limited use, but now this is now changing.
The Government’s 2025 Commonhold White Paper confirmed commonhold as the default tenure for new flats, signalling a clear shift in policy direction. Proposed reforms aim to simplify conversion from leasehold to commonhold and to strengthen the legal framework for multi-phased, mixed-phased and mixed-use developments.
“By taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners, not third-party landlords, who will own the buildings they live in and have a greater say in how their home is managed and the bills they pay.”
Other notable changes include greater mortgage lender openness to commonhold, a stronger focus on governance standards for Commonhold Associations, and clearer rules for sinking fund arrangements and long-term maintenance.
Key Changes: What’s New in 2026?
Two major pieces of legislation are expected to come into force in 2026:
Commonhold and Leasehold Reform Bill: Published in draft on 27 January 2026, this Bill aims to modernise and strengthen the commonhold system. Notably, it proposes banning leasehold for most new flats, marking a major shift toward commonhold ownership.
Renters’ Rights Act: Expected in May 2026, this Act sits outside LAFRA and focuses specifically on reforms within the private rented sector.
The Leasehold and Freehold Reform Act is already law; however, many of its practical measures depend on secondary legislation. The Government has signalled that further updates are planned, but detailed timelines have not yet been confirmed.
How LFRA Impacts Estate Management
Transparency & Accountability
One of the most immediate impacts for property management companies is the increased emphasis on transparency and accountability. Under LFRA, leaseholders gain stronger rights to receive clear, standardised service charge information and challenge unreasonable or unfair costs. Millions of leaseholders will now have access to documentation that clearly outlines how charges are calculated and spent, removing longstanding opacity across the sector.
For managing agents, this raises the bar on financial reporting, record keeping, and justification of costs. Service charge budgeting, major works planning, and contractor selection must withstand greater scrutiny, requiring robust governance processes and consistent communication with residents. While this introduces additional compliance requirements, it also presents an opportunity for professional managing agents to differentiate themselves through best practice and consumer trust.
Professional Standards
The reforms are also accelerating discussions around professionalism within the property management industry. Government announcements supporting strengthened rights for leaseholders explicitly highlight the need for improved standards and accountability among managing agents. Industry bodies have welcomed the introduction of mandatory qualifications as a crucial step toward restoring confidence in property management and addressing poor practice.
For reputable estate management companies, this reinforces the importance of skilled teams, ongoing professional development, and adherence to recognised industry standards. Those already operating within strong governance frameworks are well positioned to flourish, while less prepared operators may struggle to adapt.
Resident-Led Governance
The gradual shift from leasehold to commonhold transforms the traditional management model. In commonhold developments, ownership and decision-making sit with the residents through a Commonhold Association rather than a freeholder. Insights from commonhold developments show that this model increases resident involvement and places greater responsibility on clear governance structures and long-term planning.
Property managers will move away from enforcing landlord instructions and towards advising and supporting resident-led organisations. This includes guiding Commonhold Associations on compliance obligations, sinking fund strategies, maintenance planning, and dispute resolution. Overall, the role of the managing agent becomes more consultative and collaborative.
Operational and Commercial Implications
The loss of freeholder income streams such as ground rent does not eliminate the need for professional management. Commonhold developments still require expert oversight to manage shared spaces, budgets, health and safety compliance, and long-term asset value. However, the commercial relationship will increasingly be driven by service quality, transparency, and demonstrated value rather than contractual obligation tied to a landlord.
Property management companies must therefore refine their service propositions, clearly articulating the benefits they bring to resident-controlled developments. Those able to provide proactive property management and strong governance support will remain integral to the success of both leasehold and commonhold properties.
Greater Consumer Empowerment, Greater Scrutiny
With millions of leaseholders empowered to challenge charges more easily, managing agents operate in a more consumer-led environment. Residents are better informed and more engaged, with higher expectations of responsiveness and service quality. While this may increase short-term administration and engagement requirements, it supports a healthier, more transparent property market in the long term, one where well-run estates and professionally managed developments stand out.
An Industry Perspective from Our CEO
Commenting on its impact, our CEO David Goldberg reflected on how LFRA creates an opportunity to raise standards and provide greater transparency for leaseholders:
“The impact of LFRA should be a positive one. Not only is it long overdue but it’s also an essential step towards defining best practice, bringing greater accountability to managing agents and their customers. With so much of our role being unseen and, if implemented correctly, it brings visibility and clarity to leaseholders over their asset, the long-term maintenance and its associated costs.”
Conclusion
The Leasehold and Freehold Reform Act represents a decisive shift towards greater transparency, accountability and resident control in UK property ownership, placing increased scrutiny on how residential estates are managed. As leaseholders gain stronger rights and commonhold becomes more prominent, professional estate management will be essential to support compliant governance, clear service charge structures, and effective long-term stewardship of shared spaces.
At POD, property management is the core of what we do. Our transparent processes and strong governance, combined with proactive management, protect residents and safeguard long-term development value.
Do These Changes Affect you?
Want to learn more about how these changes impact your development or property portfolio? Get in touch with our team today:
Fill out our business enquiry form
Email us at relationships@podmanagement.co.uk
Call us on 0333 577 6656
We welcome your enquiry and look forward to assisting you.