Ground rents for leaseholders to be capped

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Ground rents for leaseholders to be capped

The government has announced that ground rents in England and Wales will be capped at £250 a year for leaseholders.

Under the plans, they will fall to a peppercorn rent after 40 years, meaning no payment at all.

The cap will apply to most residential leasehold agreements signed before July 2023, removing future shocks for homeowners budgeting over the long term.

No new leasehold flats

The Prime Minister, Sir Keir Starmer, announced the cap in a TikTok video, saying: “I’ve spoken to so many people who say this will make a difference to them worth hundreds of pounds.”

The reforms will be published in the draft Leasehold and Commonhold Reform Bill, which will be introduced today (Tuesday).

Developers will also be barred from selling most new flats as leasehold.

Instead, new apartment blocks will be built under a commonhold structure, where residents collectively own and manage the building and the land beneath it.

The government is consulting on how the shift will work in practice, including limited exemptions and transition arrangements.

Convert to commonhold

Existing leaseholders are not excluded, and the proposals will make it easier for current flat owners to convert from leasehold to commonhold if they choose.

Doing so will allow them to access the same rights as those buying new homes.

The government is also moving to end forfeiture, a long-standing rule that can see homeowners lose their property over relatively small debts.

In its place, a court-led process with tighter safeguards will apply only in more serious cases.

Transparency on fees

Further measures aim to improve transparency around service charges and building costs.

Bills will be clearer, routes to challenge unfair fees strengthened and landlords or managing agents held to higher standards, reducing unexplained increases.

Reforms will also extend to nearly two million households living in freehold homes on privately managed estates.

They currently pay additional charges for shared spaces, a practice often labelled ‘fleecehold’.

Ministers say they want to curb its future use and give homeowners more protection.

Other leasehold plans

Other plans include banning a century old legal power that allows harsh penalties for missed payments.

The government will also introduce standardised estate charge statements, enabling tribunals to replace failing management firms.

There will also be a proposal on whether resident-run management should become the default.

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