The government published the draft Commonhold and Leasehold Reform Bill on 27 January 2026, proposing to cap ground rents at £250 a year for leaseholders in England and Wales, with nothing yet in force.
Key facts
- Who: Residential leaseholders in England and Wales, landlords and freeholders, and people buying or selling leasehold homes
- From: 27 January 2026 (draft Bill published; the cap is not yet law)
- Source: PM: “We're capping ground rents at £250”
The draft Bill would cap ground rent at £250 a year. After 40 years the cap would fall to a peppercorn. The government says the cap targets unfair and unaffordable ground rents in older leases, because the Leasehold Reform (Ground Rent) Act 2022 already ended ground rents for most new long residential leases.
The draft Bill will now go through pre-legislative scrutiny, expected to be carried out by the HCLG Select Committee. Subject to parliamentary timings, the government says the cap could come into force in late 2028.
The government says many leaseholders could save over £4,000 over the course of their lease. It also says the change should unlock sales for leaseholders whose homes are hard to sell because of their ground rent terms.
Other proposals in the draft Bill include:
- Forfeiture abolished. Forfeiture allows leaseholders to lose their home and the equity they built up by defaulting on a debt as low as £350. A new enforcement regime would rebalance the system between landlord and leaseholder.
- Easier move to commonhold. Existing leaseholders would get a new process to convert, where the majority of residents agree. Homeowners would receive a stake in the ownership of their buildings and a say in the annual budget and how the building is run.
- A ban on new leasehold flats. This would apply to the purchase of residential homes. There may be some limited exemptions, which are the subject of consultation.
A Moving to Commonhold consultation was launched on the same day. It seeks views on the detail of the ban, including when it should commence and the case for any exemptions.
The government says it will keep engaging with stakeholders on the treatment of "quid pro quo" leases, where the purchase price was demonstrably lower because of a higher level of ground rent. It says this is not an open door for exemptions.
The reforms build on work to implement the Leasehold and Freehold Reform Act 2024, including increased transparency over service charges.
What this means for leaseholders and landlords
The ground rent cap is a proposal in a draft Bill, not yet law. The draft now faces pre-legislative scrutiny, and the government says the cap could come into force in late 2028, subject to parliamentary timings.
Leaseholders with older leases and high ground rents are the group the government says the cap is aimed at. The Leasehold Reform (Ground Rent) Act 2022 has already ended ground rents for most new long residential leases.
The Moving to Commonhold consultation is open on the detail of the leasehold flat ban, including timing and exemptions.
Sources
- PM: “We're capping ground rents at £250”, GOV.UK, 27 January 2026