Ground Rents to be £250 per year for Existing Leaseholders

Draft Commonhold and Leasehold Reform Bill

In the draft bill (also published on 27 January 2026), the government promises to abolish “unregulated and unaffordable ground rents” for leases in England and Wales. The changes will protect up to 900,000 leaseholders (as estimated in the bill) who are paying ground rent of more than £250 per year.

After 40 years, ground rents will be abolished entirely with the bill claiming this will make it “easier for leaseholders to take ownership of their buildings, with conversions to commonhold both cheaper and simpler”.

Subject to pre-legislative scrutiny, the changes could come into effect in 2028.

How will the changes affect you?

Whether you are a landlord or a tenant of a long-leasehold property, this announcement will have a big impact on you.

Many landlords, particularly those who own reversionary interests in large blocks, can earn income from ground rents (even low ones) for large blocks of flats. Pension funds also have large-scale investments in many freehold properties because of the income generated by ground rents. This change could reduce the value of reversionary interests, particularly for blocks of flats in London, where ground rents tend to be higher.

For leaseholders, the announcement will come as welcome news. For many leaseholders, the prospect of extending their leases can be expensive if the lease is subject to a doubling or RPI-linked ground rent. If capped, it could reduce the marriage value, making the lease extension more affordable and accessible. This could improve the saleability and mortgageability of flats.

How we can help

Take control of your leasehold future. Whether you’re a landlord or tenant, contact the Property Disputes team for tailored advice and practical solutions.