Ground rent to be capped at £250

The government has announced a significant set of reforms to the leasehold system in England and Wales. These changes include ground rent being capped at £250. New leasehold flats will also be banned and there will be a move towards commonhold ownership.

If you own a leasehold property, these proposals could have a meaningful impact over the next few years.

Proposed ground rent cap

The headline measure is a cap on ground rent for existing leases. Under the plans, ground rent will be limited to £250 a year before dropping to a peppercorn after 40 years.

The cap aims to address long‑standing concerns about leaseholders paying rising ground rent for no clear service in return. The government has estimated that many people will see savings of more than £4,000 over the period of their lease, though the exact benefit will depend on the wording of the individual lease.

For some, the issue has been more immediate. Higher ground rents or uncertain terms can deter potential buyers or make securing a mortgage more difficult. The proposed cap could help to make a property more saleable.

The move forms part of the draft Commonhold and Leasehold Reform Bill, which was published last week. Depending on the Bill’s progress through Parliament, the ground rent cap could come into force in late 2028.

Other key changes announced

Alongside the ground rent cap, the government has set out a broader package of reforms intended to give leaseholders more control and reduce the risk of unfair practices. The measures include a ban on new leasehold flats so that, with limited exceptions, new flats for homeownership will have to be sold as commonhold.

Forfeiture, which is the rule that allows a freeholder to take back a property if a leaseholder breaches the terms of the lease, will be abolished. Instead, a new lease enforcement scheme will be implemented. The intention is that commonhold becomes the default.

If you have any questions regarding the above article, please contact Tom Young on 023 8046 1254 or email Tom Young.