The UK Government has announced a major leasehold reform: ground rents for existing leaseholders in England and Wales will be capped at £250 per year. The proposal sits within a wider package aimed at reshaping (and, in many cases, replacing) the leasehold system.
If you own (or manage) leasehold property—especially flats—this is a headline you’ll want to understand properly, because it could affect property values, mortgageability, salability, ongoing costs, and resident sentiment.
Ground rent is a payment some leaseholders make to the freeholder simply for the right to occupy the property under the lease. It’s separate from:
Ground rent is often criticised because, in many leases, it offers no clear service in return—and some older leases include escalating ground rent clauses that can become expensive over time.
According to the Government’s announcement (27 January 2026), ground rents will be capped at £250 a year, meaning leaseholders paying more than this should see their ground rent reduced to the cap.
Media reporting and sector commentary add further detail on the wider direction of travel, including:
A cap of £250 for existing leaseholders, with a path to reduce monetary ground rent further over time (reported as moving to a “peppercorn” after a long transition period).
Banning new leasehold flats and expanding routes to commonhold (a tenure where flat-owners collectively own and control their building).
Ending (or reforming) forfeiture, a controversial mechanism where leaseholders can risk losing their home for relatively small debts.
This is part of a draft reform bill and is still moving through the legislative process—so exact timings and final wording matter.
The £250 figure isn’t just symbolic. In England (outside London), ground rent above £250 has historically been associated with an additional legal risk: in some circumstances, a long lease could potentially be treated as an assured tenancy, creating extra repossession leverage for the freeholder if the ground rent falls into arrears.
Leaseholder groups have long advised that one practical “fix” has been to vary leases to keep ground rent at £249 or lower to avoid the threshold.
So, beyond simply reducing annual costs, a cap at £250 can also influence, lender confidence, mortgageability, Buyer confidence and even ease of resale.
This is primarily relevant to people who own leasehold property in England and Wales—particularly flat owners, and landlords who own leasehold flats as buy-to-let investments.
If you are a letting agent, you may not pay ground rent yourself—but you may manage properties where:
Even though this is “leasehold reform”, it can spill into the lettings world in a few real ways:
1) Leasehold flats may become easier to sell and refinance
If a flat has a high or fast-escalating ground rent, it can scare off buyers and lenders. A cap can improve the story during, remortgage applications, sales progression and portfolio refinancing. That said, lenders will still consider service charges, cladding/fire safety status, and building management quality.
2) Tenant experience is often shaped by block management
Disputes around freeholders, managing agents, and charges can lead to, delayed repairs, strained communications and unhappy tenants (even when the landlord is doing everything right)
Moves toward commonhold / stronger leaseholder rights could change how buildings are run in the medium term.
3) Expect questions from clients and applicants
This is a “big headline” housing story. Landlords may ask:
And tenants (especially long-term renters who aim to buy) may ask what it means for flats generally.
This announcement is significant—but the practical steps are straightforward.
If you’re a leaseholder (or landlord with a leasehold flat)
Find your ground rent clause (lease document / leasehold information pack).
Watch for:
Updates from your freeholder/managing agent and conveyancer guidance if you are selling, lender requirements if you are refinancing. If you’re a letting agent managing leasehold flats proactively ask landlord clients: “Do you know your ground rent and service charge position?”
If a landlord is planning a sale, encourage early collection of leasehold documents to avoid delays. Keep a short FAQ ready for negotiators/property managers.
The Government announcement is dated 27 January 2026, but the exact start date depends on legislation and commencement provisions. Some reporting suggests implementation could take time (one report referenced late 2028 as a possible timing), so treat this as a reform in progress rather than an overnight change. Government announcements are traditionally very fluid, and a change of government could also have an impact.
A £250 ground rent cap is a meaningful step toward reducing one of the most criticised costs in leasehold ownership—and it may improve confidence in affected flats over time. For landlords and letting agents, the key is to understand which properties are leasehold, keep documentation tidy, and be ready to answer client questions clearly.
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