A proposed exemption from the government’s £250 annual ground rent cap could create uncertainty for property transactions and potentially delay conveyancing, Propertymark has warned. The government is considering whether "quid pro quo" leases should receive different treatment under reforms in the Draft Commonhold and Leasehold Reform Bill.
These leases involve a leaseholder agreeing to pay a higher annual ground rent in exchange for a lower upfront purchase price. The government is seeking evidence on how common such leases are and whether they should be exempt from the cap.
Propertymark warned that determining if a historic purchase price was sufficiently reduced could require specialist valuation evidence and lead to disagreements. Uncertainty over whether a lease qualifies for an exemption could also complicate information for prospective buyers and affect lending decisions.
The Draft Commonhold and Leasehold Reform Bill is due to be introduced to Parliament in autumn 2026. It is expected to cap ground rents on most existing residential long leases at £250 a year before reducing them to a peppercorn after 40 years.