Under the draft Commonhold and Leasehold Reform Bill, ground rents on existing leasehold homes will be limited to £250 a year and, over time, reduced to a nominal “peppercorn” amount — effectively zero.
The reforms, which are expected to come into force by about 2028, are part of a long-running effort to modernise what critics describe as a “feudal” housing model in which leaseholders pay annual fees for land they do not own. These fees have historically risen sharply and, in some cases, doubled every decade, making sales, remortgaging and ownership much harder for many households.
Prime Minister Sir Keir Starmer said the cap will help millions of leaseholders keep more of their money and make homes more affordable, especially as the cost of living continues to bite. Housing Secretary Steve Reed described the move as a long-overdue clampdown on a system that has left many unable to sell or benefit from the value of their own property.
The legislation also includes plans to ban the sale of new leasehold flats, strengthen protections against unfair forfeiture — where homeowners can lose their homes over small arrears — and make it easier for existing leaseholders to switch to commonhold, a form of ownership where residents jointly own and manage their building.
Supporters of the reform argue that capping ground rents will deliver significant savings to individuals and ease bottlenecks in the housing market, with some estimates suggesting savings of thousands of pounds over the life of a lease. It would also build on earlier reforms that already abolished ground rent on most new leases.
However, the proposals have drawn criticism. Some landlords and investor groups warn that the cap could harm confidence in the UK housing market and affect investment in property, although proponents counter that these concerns are overblown and that the chronic problems of leasehold outweigh them.
The reform push highlights a broader political focus on housing affordability and fairness, with leaseholders long campaigning for an end to punitive charges that many say undermine the dream of home ownership in modern Britain.
