The government has announced a major package of leasehold reforms in England and Wales. Key measures include a cap on ground rent at £250, a ban on new leasehold flats, and a shift towards commonhold ownership.

For those who own a leasehold property, these proposals could have a significant impact over the coming years.

Proposed ground rent cap

The headline reform is a cap on ground rent for existing leases. According to the plans, ground rent will be limited to £250 per year, before reducing to a peppercorn after 40 years.

The cap is designed to address long-standing concerns about leaseholders being charged rising ground rents with little or no service in return. The government estimates that many leaseholders could save more than £4,000 over the term of their lease, although the exact benefit will depend on the wording of individual leases.

For some property owners, the issue has been more immediate. High ground rents or uncertain terms can deter potential buyers or make obtaining a mortgage more difficult. The proposed cap could improve a property’s saleability.

These measures form part of the draft Commonhold and Leasehold Reform Bill, published last week. Depending on the Bill’s passage through Parliament, the ground rent cap could come into effect in late 2028.

Other key reforms

Alongside the ground rent cap, the government has outlined a wider set of reforms aimed at giving leaseholders more control and reducing the risk of unfair practices.

The changes include a ban on new leasehold flats, meaning that with limited exceptions, new flats for homeownership will have to be sold as commonhold.

Forfeiture, the rule allowing a freeholder to repossess a property if a leaseholder breaches lease terms, will be abolished. A new lease enforcement scheme will take its place.

The intention is for commonhold to become the default model for new-build properties. Leaseholders in existing buildings will be able to convert to commonhold, provided the majority of residents agree.

Commonhold explained

Under commonhold, each homeowner owns their flat outright and also holds a share in the management of the wider building. Decisions about annual budgets, maintenance, and long-term planning are made collectively.

The government says the updated framework will provide clear rules on repairs, leadership, and owners’ rights, aiming to make commonhold suitable for a broader range of buildings.

Next steps

A consultation on moving to commonhold is open until 24 April 2026. Once the government publishes its response, it will become clearer how the transition to commonhold will be managed. Leaseholders will no doubt be watching these developments closely.

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