Government to cap ground rents at £250 a year and ban new leasehold flats
The Government has announced a major overhaul of the leasehold system, including a cap on ground rents of £250 a year for homeowners in England, as part of a package of reforms aimed at reducing housing costs and strengthening homeownership.
The changes form part of the draft Commonhold and Leasehold Reform Bill, published today, which the Government said will benefit more than 5 million leaseholders and future homeowners across England and Wales.
Under the proposals, ground rents will be capped at £250 a year and then reduced to a peppercorn after 40 years, while new leasehold flats will be banned entirely.
Keir Starmer said the reforms would save some households hundreds of pounds a year and help address cost-of-living pressures.
Speaking in a video published on TikTok, Starmer said: “Good news for homeowners, we’re capping ground rent 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 Government said the reforms will also unlock stalled house sales by addressing ground rent terms that have made some properties difficult to sell. It estimates that many leaseholders could save more than £4,000 over the course of their lease as a result of the changes.
As part of the reforms, forfeiture will be abolished, removing the ability for leaseholders to lose their home and accumulated equity over relatively small debts. A new enforcement regime will also be introduced to make the system fairer between landlords and leaseholders.
The bill will introduce a new process to make it easier for existing leaseholders to convert to commonhold, where homeowners have a shared stake in their building and a greater say over management, budgets and repairs. The Government said the revised commonhold model has been designed to work for different types of developments and mortgage lenders, with stronger management and governance rules.
The proposals build on the Leasehold and Freehold Reform Act 2024, including measures to improve transparency around service charges, and follow the passage of the Renters’ Rights Act, which the Government said delivers the biggest expansion of renter protections in a generation.