Updates to Ground Rent Rules
On 27 January 2026, Prime Minister Keir Starmer confirmed via a video on TikTok that ground rents will be capped at £250 a year for leaseholders in England and Wales, changing to a peppercorn rent after 40 years.
The Prime Minister said:
“Good news for homeowners, we’re capping ground rents at £250. That means if you are a leaseholder, and your ground rent is more than £250, you’ll be paying less.”
“And I’ve spoken to so many people who say this will make a difference to them of hundreds of pounds.”
“That’s really important because the cost of living is the single most important thing across the country.”
“So this is a promise that we said we’d deliver and I’m really pleased that we’re delivering on that promise.”
The full video can be found on the Prime Minister’s TikTok account: @keirstarmer
This is part of the UK government’s wider plan to reform home ownership.
The Leasehold Reform (Ground Rent) Act 2022 already ended ground rent for most new long residential leases going forward. However, this proposal focuses on tackling unfair and unaffordable ground rents in older leases, and the cap will now apply to most residential leases granted before the Act came into force.
In response to the announcement, Steve Reed, Secretary of State for Housing, said:
“If you own a flat, you can be forced to pay ground rent that can become completely unaffordable. We said we’d be on the side of leaseholders – which is why today we are capping ground rent – helping millions of leaseholders by saving them money and giving them control over their home.”
“The leasehold system has tainted the dream of home ownership for so many. We are taking action where others have failed – strengthening home ownership and calling time on leasehold for good.”
In addition to the cap on these charges, it was suggested that new leasehold flats will also be banned, under proposals to be put out to consultation. Under these reforms, developers will no longer be allowed to sell new flats as leasehold (except in limited cases). These changes mean that new flats will be sold as commonhold, meaning that you will own the ground your flat is built on and the overall building jointly with your neighbours.
Other changes to leasehold legislation, with some already in force, include:
- Existing leaseholders will have the right to switch to commonhold
- Forfeiture (where some people can lose their home for owing as little as £350 in fees) is being scrapped. A new fairer system will be introduced, replacing the current process, with strict safeguards to be followed for more extreme cases.
- Service charges and building maintenance costs will be more transparent.
The reforms have been published in a draft Leasehold and Commonhold Reform Bill. The draft Bill will now move to pre-legislative scrutiny, expected to be carried out by the Housing, Communities and Local Government (HCLG) Select Committee. Subject to parliamentary timings, the ground rent cap could come into force in late 2028.
For more information on these changes, read the announcements here:
- Ministry of Housing, Communities and Local Government: Own a flat or looking to buy? Here’s what the new leasehold shake-up means for you.
- UK Press Release: PM: “We’re capping ground rents at £250”
The proposed changes have drawn criticism from some, including the Residential Freehold Association (RFA), the trade body representing professional freeholders, who say the ground rent cap is “wholly unjustified”, warning that caps to ground rent could have an impact on UK investors.
In comments published by the Guardian, a spokesperson for the RFA said:
“The inclusion of a ground rent cap in the draft bill represents a wholly unjustified interference with existing property rights which, if enacted, would seriously damage investor confidence in the UK housing market and send a dangerous and unprecedented signal to the wider institutional investment sector”.
“Property rights and contract law are fundamental drivers of domestic and global investor confidence in the UK.”
Source: The Guardian: Leaseholders in England and Wales to have ground rent capped at £250 a year
Leasehold Solicitors in Blackheath
At Beverley Morris & Co. Solicitors, we offer a full range of legal services related to leasehold property.
Our experienced leasehold solicitors advise leaseholders on lease extensions, enfranchisement, right to manage and other legal issues affecting property ownership. If you are a leaseholder and need some legal advice on the Leasehold and Freehold Reform Act 2024 or any other matter affecting you, get in touch with us today.
We will advise the best course of action for your situation and help and support you at every stage.
To speak to our Lease Extension solicitors today, call us on 020 8852 4433 or enquiries@beverleymorris.co.uk.