The Government yesterday confirmed plans to cap ground rents at £250 per year but homeowners will need to wait until late 2028.
- The draft Commonhold and Leasehold Reform Bill was published in Parliament yesterday, stating that ground rents will be capped at £250 per year before being reduced to a peppercorn after 40 years.
- The draft Bill will now move into pre-legislative scrutiny. Subject to parliamentary timings, the ground rent cap could come into force in late 2028.
- New leasehold flats will also be banned and replaced with a new commonhold system that is being consulted on.
This is a welcome move by both agents and leaseholders:
Ground rent was introduced centuries ago as part of a feudal system, and in a modern housing market it has long since outlived its purpose.
This is a genuinely sensible move and one the market has needed for a long time. Ground rent has been a persistent friction point for buyers, particularly international ones, who simply don’t understand why they are paying an ongoing charge for the ground beneath their own home.
Ground rent is understandably a concern we hear from many buyers, and it often arises late in the transaction when momentum should be building. Capping it at £250 directly addresses that friction. It simplifies decision-making, reduces last-minute renegotiations and removes a cost that has felt increasingly difficult to justify.
Anything that reduces uncertainty and shortens the gap between offer and exchange is positive for the market.
This change helps restore confidence in leasehold stock, supports smoother sales processes and makes pricing and expectations clearer on both sides of the transaction. It is a practical intervention that should improve liquidity rather than distort it.
Timothy Douglas, head of policy and campaigns at Propertymark, added:“We welcome the announcement from the UK Government to cap ground rents and ultimately reduce them to a peppercorn rate. We know from our research with Propertymark member agents that leasehold properties with escalating ground rent will struggle to sell, even if priced correctly.
Addressing ground rents for existing leaseholders is a key step towards a fairer leasehold system. It brings existing leaseholders on par with new leaseholders, and it tackles one of the largest barriers to selling leasehold properties.
We also welcome steps to make it easier and cheaper to buy leasehold property and the ambition to transition towards commonhold, but agents and consumers will need clear guidance, education, and practical support to understand and navigate this change.
A draft Bill provides a vital opportunity for policymakers to work with the sector to get the reforms right before legislation is passed into law. It is vital that the changes come in as soon as possible to support property transactions and that the costs are reduced for consumers.”
Sean Hooker, head of redress for Property Redress, described the move as a major reform for the sector.
He said it will clarify and reassure leaseholders that their ongoing costs for ground rent are certain and there are no hidden or unexpected hikes.
He added: “Whilst the redress schemes do not determine on ground rent disputes, we welcome the move as the confusing array of different arrangements does cause complaints, especially when trying to buy or sell a leasehold property.
The other moves, such as the abolition of the right forfeiture, which has been used for minor debts and breaches of lease, is also a positive move as we have seen this used to frustrate the process of redress when leaseholders, often out of desperation, withhold charges they feel unfair or they question the cost or quality of the service they receive.
The moves to repeal leasehold entirely and bring in a new and fairer system will also mean many benefits for those people who chose to buy properties with common and shared tenure and services.
Current leaseholders should, however, understand this is the start of the process with consultations and the legislation will need to be introduced and progressed through parliament. Thereafter, the changes will be phased in, with new properties being prioritised and existing leases converted in the future.”
