Today ( 28th January 26) the UK government has announced a major overhaul of the leasehold property system that could bring long-awaited relief to millions of people who pay ground rent on leasehold homes.
Under the government’s draft Commonhold and Leasehold Reform Bill, annual ground rent on existing leasehold properties in England and Wales would be capped at £250 per year. Over time, around 40 years, this is expected to reduce further to a nominal “peppercorn” rent, essentially making ground rent nearly zero.
Why This Matters
Leasehold ground rent has long been seen as an unfair burden for leaseholders, especially when it can escalate over time without corresponding services in return. Critics have likened the traditional system to a “feudal relic” that can:
- Keep people paying high costs for simply living in their own home
- Make properties harder to sell
- Affect mortgage approvals
All because the owner doesn’t own the land the property sits on.
What the Reform Includes
The draft proposals include several potential changes:
- Ground rents capped at £250 a year for existing leases
- Ground rents eventually phased down to a peppercorn (almost £0) over decades
- Ban on new leasehold flats in future developments
- New rights for leaseholders to move to a commonhold model (where residents have more control)
- Abolition of forfeiture over minor lease debts – a protection against losing your home over small amounts
- These changes are aimed at putting more control into the hands of homeowners rather than freeholders.
When Will This Take Effect?
This announcement is about the draft Bill, meaning the details now go through scrutiny in Parliament before becoming law. Experts expect implementation to take time, and commentators have pointed to 2028 or later as the likely practical start date for the ground rent cap on existing leases.
What It Doesn’t Do (Yet)
- The cap doesn’t immediately reduce what people are paying in 2026 – it’s designed to be phased in
- It doesn’t automatically eliminate every leasehold cost or service charge
- How holiday homes or non-standard leases (like some tourism or chalet leases) are treated isn’t yet fully clear – details will come as the Bill progresses
Is This a Win for Leaseholders?
For many, yes, especially those caught in high or escalating ground rents. It puts long-standing reforms into motion and aims to standardise leasehold costs for fairness. Ultimately the reform is about simplifying homeownership and making properties easier to sell, mortgage and live in without punitive charges.
If you’re a leaseholder, particularly one paying high ground rent, it’s a story worth following closely. These changes could make a huge financial difference in the long term and reshape how residential property ownership works in England and Wales.
