Everlasting Joy for Leaseholders: The Ground Rent Cap

March 19, 2026

The UK Government have finally released details on the Commonhold and Leasehold Reform Bill. At the heart of the Bill is a proposal to cap Ground Rent at £250 on most existing long residential leases which were granted before the 30th June 2022, which will then reduce to a peppercorn rent after 40 years.

Whilst this move might be popular by many who own leasehold properties, making the cost of leasehold ownership appear preferable and attempting to strike a fair balance between various parties, there is likely to be a huge effect on other investors and pension funds; however such impact and assessment has not yet been felt.

Commonhold and Leasehold Reform Bill – why now?

To fully understand why the Labour Government has introduced this Bill, one must fully understand the history pre-dating the Labour Government.  Found in most Leases will be the Ground Rent figure, something which has been of significant contention, especially those leases that allow for either high ground rent or escalating ground rents which are known to either have significant issues in selling a property or obtaining a mortgage.

With all of this in mind, the Leasehold Reform (Ground Rent) Act 2022 abolished all ground rents for new and future leases which was introduced by the Conservative Party.

Key changes proposed under the draft Bill

Contained within the Commonhold and Leasehold Reform Bill draft , there are various provisions which directly relate to enforcement of long residential leases – under the current system any Lease which contains Ground Rent and exceeds £250 outside of London and £1,000 inside of London, could have fallen into the Assured Shorthold Tenancy (AST) trap meaning that Landlords could use Ground 8 possession rules for arrears.

However, with the draft Bill this seeks to abolish forfeiture which is often described as a draconian and disproportionate measure allowing Landlords to terminate leases and repossess homes and replace it with a proportionate and fairer enforcement system to still allow Landlords to address breaches of leasehold covenants, but with oversight and without the automatic loss of one’s home.

What the proposed reforms mean for existing leaseholders

Whilst we already have the Leasehold Reform (Ground Rent) Act to prevent any new Leases from 2022 being subject to Ground Rent, the Labour Party has taken this one step further to enable a fairer system for those with pre-existing Leases to afford extra security within their homes.  These changes are not expected to take place until sometime in 2028, but this is subject to parliamentary time. so, whilst the idea is there, nothing has been enshrined into law – it must also be said, if this does become law, it will be interesting to see how investors and pension funds react.

How can we help

Every lease is different and if you’re unsure how the proposed ground rent cap may affect you, contact us to speak to a member of our Residential Property Team.

Dominic Coleman
Senior Solicitor, Residential Property
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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