How the 2026 Leasehold Reforms Empower Residential Management Companies
If you sit on a residential management company, or you are weighing up taking over your building’s management, the leasehold reforms moving through 2026 give residents more control, reduce some barriers to taking over management, and raise expectations around transparency.
Some changes are already in force under the Leasehold and Freehold Reform Act 2024. Others are still proposals in the draft Commonhold and Leasehold Reform Bill, published in January 2026 for pre-legislative scrutiny. The direction is clear. Residents are being given a bigger say in how their buildings are run, but that also brings more accounting responsibility.
What is actually changing?
There is no single reform that switched on overnight. The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024, and its provisions are being commenced in stages. The 2-year ownership rule for lease extensions and enfranchisement claims has been removed since January 2025. Right to manage changes have been live since March 2025.
Alongside this, the government published the draft Commonhold and Leasehold Reform Bill on 27 January 2026. It has not yet become law. It proposes a wider move towards commonhold and further restrictions on leasehold, including changes to existing ground rents. You can follow the official position through the GOV.UK leasehold toolkit.
| Change | Current position |
|---|---|
| 2-year ownership rule for lease extension and enfranchisement | In force since January 2025 |
| Non-residential limit for right to manage raised to 50% | In force since March 2025 |
| RTM legal cost burden reduced in most cases | In force since March 2025 |
| Service charge transparency and insurance commission reforms | Being implemented through further rules |
| Existing ground rent capped at £250, then peppercorn after 40 years | Proposed in the draft Bill |
| Commonhold as the default for most new flats | Proposed in the draft Bill |
More buildings can now take control
The right to manage lets leaseholders take over management from the landlord without buying the freehold and without proving fault. At least half of the qualifying leaseholders must take part.
The 2024 Act widened access. Buildings with up to 50% non-residential floorspace can now qualify, up from the old 25% limit. That brings many more mixed-use blocks into scope. If you run one, our note on mixed-use and multi-block schemes is worth a read, and commercial property management accounting covers the commercial portion.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
The cost barrier has also come down. In most right to manage cases, leaseholders are no longer required to pay the freeholder’s legal costs. That makes the process less daunting, although professional advice is still important. Our guide to accounting for RTM companies sets out what running one involves in practice.
Greater transparency on service charges
This is the part residents usually notice first. The reforms aim to make service charge information clearer and more standardised, while tackling opaque building insurance commissions and unjustified litigation costs.
For your management company, that means tighter record keeping and clearer year-end service charge statements. The common service charge mistakes that trigger disputes become harder to hide, but also easier to avoid with proper systems.
The road to commonhold
Commonhold is the longer-term reform. Under the draft Bill, most new flats would be sold as commonhold rather than leasehold, and existing leaseholders would have clearer routes to convert. Commonhold means no lease expiry, no ground rent and no third-party freeholder. Owners hold their units and manage the shared parts through a commonhold association.
That does not remove the need for proper management. Lifts still need servicing, roofs still need repairing, and budgets still need explaining. That is why building management reports and clean handovers still matter, as our piece on managing agent handovers explains.
More control means more responsibility
Here is the catch. Taking control of your building makes you responsible for the accounting that comes with it. An RMC or RTM company is still a company. It files accounts at Companies House, prepares service charge accounts, keeps records and answers to its members.
Done loosely, that is where disputes start. This is where proper residential property management accounting earns its place, alongside service charge accounting that holds up. An outsourced finance team can carry the regular workload, property tax specialists handle the tax side, and a landlord accountant helps where members also let their flats.
Frequently asked questions
What is the difference between an RMC and an RTM company?
An RMC is usually named in the lease and manages the building from the outset. An RTM company is set up by leaseholders to take over management using their statutory right.
How many leaseholders are needed to claim the right to manage?
At least half of the qualifying leaseholders in the building must take part.
Has commonhold replaced leasehold yet?
No. The commonhold reforms are still proposals in the draft Bill and are not yet law.
Do RMCs still need to file accounts?
Yes. An RMC or RTM company is still a company and must keep proper company and service charge records.
Take control with the right support behind you
If your building is taking on its own management, or you are weighing it up, speak to FHP Accounting. We work with RMCs, RTM companies and managing agents as a trusted Nottingham accountancy firm, and we make sure your accounts and service charges stand up to scrutiny. Call 0115 648 8686 or get in touch for a free consultation.
I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
