Big changes are on the horizon for leasehold homeowners in England and Wales. The government has published draft legislation that will cap ground rents at £250 a year for existing leases from about late 2028, with a plan to reduce that amount to a “peppercorn” (a nominal sum) over the following decades.
Why this matters to leaseholders
Ground rent is the annual amount you pay to the freeholder — the owner of the land under your home. Traditionally, these rents could rise over time or be set at levels that made properties harder to sell or mortgage.
By setting a cap, policymakers hope to reduce costs, unlock property sales that have stalled, and make homeownership fairer and more predictable.
What the new cap involves
Key points in the draft reform include:
-
£250 cap on ground rent for most existing leasehold homes in England and Wales.
-
After 40 years, ground rent will phase down to a peppercorn, meaning effectively zero.
-
New leasehold flats would be banned, with a push towards commonhold ownership where residents own their building collectively.
-
The abolition of forfeiture for small unpaid charges will offer leaseholders greater security.
These reforms form part of a wider effort to modernise leasehold law in England and Wales and tackle costs that many homeowners have long criticised as unfair.
What this means if you’re selling
If you’re selling a leasehold property, having a capped ground rent could be a positive selling point - especially for buyers who are cautious about lease terms. Clarity around future costs often reassures purchasers and can speed up the sales process.
Even if your current lease predates these reforms, explaining your ground rent position clearly and professionally to buyers can make a difference.
What it means if you’re buying
For buyers, the cap brings greater confidence and transparency. You’ll have a clearer handle on long-term costs, and capped ground rent may make it easier to secure a mortgage.
In a market where every cost matters, this change could make leasehold homes more appealing and easier to plan for financially.
Reeds Rains insight
At Reeds Rains, we’re closely watching how these reforms develop and how they affect both buyers and sellers. If you’d like help understanding how the ground rent cap could influence your property plans, our local experts are ready to guide you with practical, straightforward advice.
Contact your local Reeds Rains branch today - we’re here to help you make informed property decisions.
The Reeds Rains Content Marketing Team
