Ground Rents to Be Capped at £250: What Leaseholders and Homebuyers Need to Know

Posted on Tuesday, 27 January, 2026

The UK Government has today announced a major transformation in the way ground rents are regulated in England and Wales — a move that could benefit millions of leaseholders and make homeownership fairer and more affordable.

What’s Been Announced?

On 27 January 2026, the Prime Minister confirmed new plans to cap ground rents at £250 per year for existing leases, as part of a sweeping overhaul of the residential leasehold system. The cap is a key component of the draft Commonhold and Leasehold Reform Bill, published alongside the announcement.

This cap will apply to ground rents currently paid by leaseholders, meaning that if your existing ground rent exceeds £250 a year, it will be legally limited to £250. Over time — specifically after 40 years — the rent will further reduce to a peppercorn (nominal zero) rent.

Why This Matters

Ground rent is a fee paid by a leaseholder to the freeholder for the land on which a home stands — often separate from service charges or maintenance costs. Historically, some ground rent clauses have escalated rapidly or been set at high levels, creating barriers to selling or remortgaging a property and adding to the overall cost of homeownership.

The new cap aims to:

Reduce costs for existing leaseholders, potentially saving many households hundreds or even thousands of pounds over time, with some seeing savings in excess of £4,000 on their ground rent commitments.
Unlock stalled property sales where high ground rents have deterred buyers or risked mortgage refusals.
Improve fairness and affordability, particularly amid ongoing cost-of-living pressures.

What Else Is Changing?

As part of the government’s broader leasehold reform package:

New leasehold flats will be banned — marking a shift away from the traditional leasehold model for future homes.
Existing leaseholders will have stronger rights, including pathways to convert to commonhold ownership, giving flat owners greater control over their buildings and management decisions.
Rules on forfeiture (the losing of a home over unpaid ground rent debts) will be reformed to provide better protections for leaseholders.

When Could These Changes Happen?

The ground rent cap and related leasehold reforms are part of draft legislation and will need to pass through Parliament before becoming law. Subject to parliamentary timing, the cap could come into force as early as 2028.

What This Means for You

If you’re a current leaseholder:

Check your current ground rent. If it’s above £250, it will be capped at that level once the reforms take effect.
The cap should make it easier to sell or remortgage your home in future.
You could consider speaking with a solicitor or property adviser to understand how the reforms affect your specific lease.

If you’re buying a property:

The proposed ban on new leasehold flats may influence how homes are marketed and sold in the coming years.
Properties with historically high ground rents may become more attractive once the £250 cap is law.

In Summary

This ground rent cap is one of the most significant changes to the leasehold system in decades. It represents a government commitment to curb unfair charges, boost housing affordability, and give leaseholders greater certainty and control over their homes.

For more information about how these reforms could impact you — whether buying, selling or owning leasehold property — speak to your property adviser or solicitor.

Source: https://www.gov.uk/government/news/pm-were-capping-ground-rents-at-250