The UK government has announced plans to cap ground rents at £250 per year for leaseholders in England and Wales, as part of broader leasehold reform proposals.
Prime Minister Keir Starmer announced the measure in a video posted on TikTok, marking the first time a British prime minister has used the platform for a major government announcement. “If you are a leaseholder, and your ground rent is more than £250, you’ll be paying less,” Starmer stated.
Draft legislation details
The changes will be published in the draft leasehold and commonhold reform bill, which was introduced on Tuesday. The proposals include a ban on new leasehold flats and will grant existing leaseholders the right to convert to commonhold ownership, giving homeowners greater control over their properties.
The reforms will also abolish forfeiture, the current mechanism that allows leaseholders to lose their homes and equity by defaulting on debts as low as £350. A new enforcement regime will be implemented to replace the existing system.
Under the proposed commonhold model, residents will have input on annual budgets and building management decisions, with additional protections when issues arise.
Government position
Housing Secretary Steve Reed said the changes would help millions of leaseholders by reducing costs and providing greater control over their homes. “The leasehold system has tainted the dream of home ownership for so many,” Reed stated.
Industry response
The Residential Freehold Association (RFA), representing professional freeholders, opposed the ground rent cap. A spokesperson described it as “wholly unjustified interference with existing property rights” and warned it could “seriously damage investor confidence in the UK housing market.”
The RFA stated that property rights and contract law are fundamental to domestic and global investor confidence in the UK, suggesting the changes could affect the country’s reputation with investors.
Market implications
The reforms will affect millions of existing leaseholders across England and Wales. The consultation period will determine the final implementation details and timeline for the proposed changes to take effect.