The UK government has unveiled landmark leasehold reform legislation that will see ground rents capped at £250 per year for existing leaseholders in England and Wales, aiming to ease the financial burden on millions of homeowners and overhaul the controversial leasehold system.
This change is part of a broader package of reforms designed to improve fairness and transparency in property ownership and make homes easier to sell, remortgage and live in.
Under the government’s proposals:
Leaseholders who currently pay more than £250 annually — sometimes rising steeply over time — will see their payments reduced in line with the new cap once the legislation comes into force.
High and escalating ground rents have long been criticised for making properties harder to sell or remortgage, particularly where rents double periodically or exceed acceptable legal thresholds. Under current rules, ground rent above £250 a year outside London (or £1,000 in London) can trigger legal classification issues and even cause properties to be treated as different tenancy types, complicating ownership rights.
The cap is expected to save many leaseholders thousands of pounds over the term of their lease and reduce financial uncertainty for buyers and lenders.
The government plans to ban the sale of new leasehold flats, meaning future developments will no longer be sold under the leasehold model. Instead, new homes will be offered under alternative ownership structures that give buyers more control.
Existing leaseholders will be given an enhanced right to convert their properties to commonhold, a system where flat owners collectively own and manage the building. This aims to give homeowners greater say over service charges, budgets and repairs.
Commonhold was introduced in 2004 but has seen limited uptake. The reforms seek to reinvigorate it as a mainstream ownership model.
The planned Commonhold and Leasehold Reform Bill will also propose measures to:
The government expects the reforms to benefit millions of leaseholders across England and Wales. Many of those currently paying high ground rents — particularly in the South East and London — will find properties easier to sell following reform.
While the announcement has strategic backing in Parliament, analysts expect the new legislation to be introduced and phased in over the next few years, with full implementation possibly extending into late 2028 or beyond.
Support from Campaigners
Housing campaign groups and many leaseholders have welcomed the changes as long-overdue, saying the cap will prevent unfair costs and give people more confidence in owning their homes.
Industry Concerns
Representatives from the property and investment sectors — including the Residential Freehold Association — have raised concerns that the cap could undermine confidence in UK property investments and create financial losses for freeholders and pension funds.
Government ministers argue that balancing leaseholder protection with a workable property market requires careful implementation, which is why the cap is phased and paired with broader reforms.
With ground rents capped at £250 and wider leasehold reforms on the way, buying property is becoming clearer and more buyer-friendly.
At CHBL, we help buyers make confident decisions with expert guidance, market insight and easy-to-use tools.
Useful Buying Tools
Guides, FAQs & Market Updates
Please leave your message here, and a member of our team will get back to you within 24 hours. Alternatively, you can reach us at info@chbl.uk or call us at +44 (0) 207 903 6881.
International House, 1 St. Katharine's Way
London, E1W 1UN
30 Churchill Place, London, E14 5RE
