Ground rents paid by leaseholders in England and Wales will be limited to a maximum of £250 a year under new government plans to overhaul the leasehold system. The change forms part of a wider package of reforms aimed at reducing costs for homeowners and giving residents more control over how their properties are run.
The proposals, set out in a draft Leasehold and Commonhold Reform Bill, also include ending the sale of new leasehold flats and making it easier for existing leaseholders to switch to commonhold ownership. Ministers say the measures are designed to tackle long-standing problems with rising charges that have left many people unable to sell or remortgage their homes. Around five million properties are currently held on a leasehold basis across England and Wales.
Under the plans, ground rents will eventually fall to a nominal “peppercorn” level after 40 years. The bill would also abolish forfeiture rules that allow leaseholders to lose their homes over relatively small debts. The government argues the reforms strike a balance between protecting leaseholders and avoiding excessive disruption to pension funds and investors.
Campaigners have broadly welcomed the cap, though some say it does not go far enough. Several leaseholders described the announcement as a relief after years of being stuck with escalating costs, while others remain concerned the changes could face legal challenges. Freeholder groups, meanwhile, have warned the reforms could undermine investor confidence. The bill is now set for parliamentary scrutiny, with the cap expected to take effect towards the end of the decade.
