Ground rents to be capped at £250 a year under leasehold reforms

The government has published a draft Commonhold and Leasehold Reform Bill to cap annual ground rents at £250 and ban new leasehold flats, with the measures expected to reach effect subject to parliamentary timings, possibly in late 2028.

The government has published a draft Commonhold and Leasehold Reform Bill that would cap annual ground rents at £250. The proposals would also ban new leasehold flats and give many existing leaseholders the right to switch to commonhold. Officials say the changes are intended to reduce unfair ground rent liabilities and make some homes easier to sell. Subject to parliamentary timings, the cap could come into force in late 2028. Key facts: - The bill would cap ground rent at £250 a year and reduce it effectively to zero after 40 years. - New leasehold flats would be banned and existing leaseholders would gain a route to commonhold ownership. - There are around 3.8 million leasehold properties with a ground rent obligation in England and Wales. - The government estimates 770,000 to 900,000 leaseholders currently pay more than £250 a year, and last year ground rents totalled over £600 million; the government says combined savings across leases could reach about £12.7 billion. - The article mentions M&G warned the plans could cause a one-off hit of about £230 million and an annual adjusted operating profit impact of around £15 million, and trade bodies such as the Residential Freehold Association expressed concern for investor confidence. - The draft bill would also abolish forfeiture for small debt defaults that can currently put leaseholders at risk of losing their home, according to the government. Summary: The proposals are presented as a broad overhaul intended to give leaseholders greater control and reduce costs, while also addressing barriers to selling some leasehold properties. The measures have drawn support from consumer and housing bodies and concern from some investors and freeholder representatives. The bill will proceed through Parliament and, subject to parliamentary timings, the cap could come into force in late 2028.