A draft Commonhold and Leasehold Reform Bill proposes capping most existing long residential ground rents at £250 annually. The proposal also includes a reduction of these rents to a peppercorn after 40 years.
This initiative is part of a broader programme of change, following the Leasehold and Freehold Reform Act (LAFRA), aimed at making leasehold less punitive for consumers and preparing for wider commonhold use.
A House of Commons research paper indicates that approximately 3.8 million leasehold homes in England and Wales have a ground rent obligation. Between 770,000 and 900,000 leaseholders currently pay over £250 a year.
ALEP, which represents solicitors and valuers in leasehold reform, found that 81.8% of its members believe ground rents negatively impact the sale of leasehold properties. Additionally, 70% reported that some ground rents cause issues when agreeing a mortgage.
The government's impact assessment anticipates that the cap will require further legislation, guidance, and an enforcement framework before its planned implementation in 2028.