The government is asking whether leases that trade a higher ground rent for a lower premium should be exempt from, or treated differently under, its proposed £250 ground rent cap.
Key facts
- Who: Leaseholders and freeholders with residential leases, in particular those who have agreed a 'quid pro quo' lease, and people with professional experience in this area
- From: 2 July 2026
- Source: Quid pro quo leases and the ground rent cap
The government has published a consultation on how its proposed cap on ground rents in residential leases should apply to 'quid pro quo' leases.
Background
In the Commonhold and Leasehold Reform Bill, the government is legislating to cap ground rents in residential leases at £250 per year. The ground rent would change to a peppercorn after 40 years.
What is a 'quid pro quo' lease?
A 'quid pro quo' lease is one where the leaseholder and freeholder agree a higher ground rent in return for a corresponding reduction in the premium.
The question
The government is considering an exemption from the cap for these leases. The consultation seeks views on three points:
- whether there should be an exemption
- how an exemption should be defined
- how an exemption should work
The government is also seeking evidence from people who have agreed a quid pro quo lease and from those with professional experience in this area.
What this means for leaseholders and freeholders
If you hold or grant a lease where a higher ground rent was agreed in exchange for a lower premium, this is the type of arrangement the consultation concerns. The government is looking at whether such leases should be exempt from the cap or treated differently.
The government has asked specifically for evidence from people who have agreed this kind of lease, as well as from professionals with experience of them.
Sources
- Quid pro quo leases and the ground rent cap, GOV.UK: https://www.gov.uk/government/consultations/quid-pro-quo-leases-and-the-ground-rent-cap