Ground rents are set to be capped at £250 a year, changing to a peppercorn cap after 40 years and will take affect from late 2028, according to an announcement from Prime Minister Keir Starmer.
The change was announced as part of the draft Commonhold and Leasehold Reform Bill which was published on the 27th January 2026 and it will fundamentally rewire homeownership across England and Wales.
Starmer, via a video on social media, said: “Good news for homeowners, we’re capping ground rent at £250. That means if you are a leaseholder, and your ground rent is more than £250, you’ll be paying less…So this is a promise that we said we’d deliver and I’m really pleased that we’re delivering on that promise.”
New leasehold flats will also be banned and forfeiture, whereby leaseholders can lose their home and the equity they built up by defaulting on a debt as low as £350, will also be abolished and a new enforcement regime will rebalance the system – making it ‘fairer between landlord and leaseholder’.
Gary Scott, Property Litigation Partner at Spector Constant & Williams, said: “The UK Government’s newly announced cap on ground rents will, in practice, materially affect a relatively small minority of leaseholders, likely less than 25% of all those with a ground‑rent obligation. Current government estimates indicate that around 770,000 to 900,000 leaseholders pay more than £250 per year, out of approximately 3.8 million leasehold properties that still carry a ground‑rent charge.
“While this means the vast majority of leaseholders will see no direct financial change from this measure, for the much smaller group of leaseholders still burdened by onerous, doubling, or investment‑linked ground rents, the impact will substantial.”
A new process to make it easier for existing leaseholders to convert to commonhold will also be introduced under a revamped commonhold model where homeowners will receive a stake in the ownership of their buildings and be given a stronger say in the issues that affect them, with greater control over how the building is managed and the bills they pay.
Scott Goldstein, property litigation partner at Payne Hicks Beach, said: "Under the new lease enforcement scheme, landlords will no longer be able to end long residential leases unilaterally. Instead, they must meet legal requirements intended to protect leaseholders. The new rules will not allow enforcement for unpaid ground rent, or for small amounts of other unpaid charges such as service charges.
"As with the removal of no-fault evictions, the Government says landlords will be protected by the courts. However, this offers little reassurance given court staff shortages and long delays. In practice, these reforms are unlikely to have much impact because changes made in 2002 already made it much harder for landlords to end residential leases, requiring a court or tribunal decision first. As a result, forfeiture is relatively rarely used in residential cases."
