The Prime Minister announced a £250 annual cap on residential ground rents for leaseholders across England and Wales, alongside plans to move to a peppercorn rate after 40 years. Keir Starmer set out the policy in a video published on TikTok, linked to the release of the draft Commonhold and Leasehold Reform Bill.
The government said the measures aim to reduce household costs, strengthen homeownership, and address long-standing concerns about how leasehold properties are managed.
Introduction
The Prime Minister and the Department for Housing announced new limits on residential ground rents on Tuesday 27 January 2026, as part of a wider package of reforms to the leasehold system across England and Wales. The measures were presented alongside the publication of the draft Commonhold and Leasehold Reform Bill.
Ministers said the proposals are intended to give leaseholders stronger rights, clearer control over how their buildings are run, and greater transparency over charges and protections linked to homeownership.
Impact on Leaseholders and Housing Costs
Ministers said the cap will help leaseholders keep more of their income and reduce bills that they say provide no clear service in return. The government said some families could save hundreds of pounds.
The government also said many leaseholders could see savings of more than £4,000 over the course of their lease. It said the change is intended to help unlock home sales where ground rent terms have made properties hard to sell.
Legislative Framework and Reform Bill
The government published the draft Commonhold and Leasehold Reform Bill on Tuesday 27 January. It said the Bill is intended to change how homeownership works across England and Wales and provide stronger powers and protections for leaseholders.
Ministers also said new leasehold flats will be banned as part of the reforms, with the government describing this as a move to strengthen homeownership and end the leasehold system for new purchases. The government said there may be limited exemptions where leasehold may still be appropriate, which will be consulted on.
- Draft Commonhold and Leasehold Reform Bill published
- Plan to ban new leasehold flats for residential purchase
- Consultation to consider limited exemptions
Reform package set out alongside the Bill
| Ground rents | Cap at £250 a year, moving to a peppercorn rate after 40 years. |
| New leasehold flats | Government said new leasehold flats will be banned for the purchase of residential homes, with consultation on exemptions. |
| Forfeiture | Ministers said forfeiture will be abolished and a new enforcement regime introduced. |
| Commonhold | Government said it will introduce an easier process for leaseholders to convert to commonhold under a revamped model. |
Transition to Commonhold Model
The government said it will introduce a process to make it easier for existing leaseholders to convert to commonhold. Under the model described, homeowners would receive a stake in ownership of their buildings and have a stronger say in how buildings are managed and how bills are set.
It said residents would have a say in annual budgets and how buildings are run, with protections when things go wrong. The government also said current leaseholders would be given the opportunity to switch to commonhold where a majority of residents agree.
Enforcement and Tenant Protections
Ministers said forfeiture will be abolished, describing it as a process where leaseholders can lose their home and built-up equity by defaulting on debts as low as £350. The government said a new enforcement regime will rebalance the system between landlord and leaseholder.
The government said the reforms build on work to implement the Leasehold and Freehold Reform Act 2024, including increased transparency over service charges. It also referenced its Renters’ Rights Act, which it said will increase protections for renters by ending ‘no fault’ evictions and limiting multiple rent hikes and bidding wars.
Ministerial Comments
Keir Starmer, Prime Minister said;
“Good news for homeowners, we’re capping ground rent at £250. That means if you are a leaseholder, and your ground rent is more than £250, you’ll be paying less.
Steve Reed, Secretary of State for Housing said;
“If you own a flat you can be forced to pay ground rents that can become completely unaffordable. We said we’d be on the side of leaseholders – which is why today we are capping ground rent – helping millions of leaseholders by saving them money and giving them control over their home.”
Moving Forward
The government said the draft Commonhold and Leasehold Reform Bill will move into pre-legislative scrutiny, expected to be carried out by the HCLG Select Committee. It said that, subject to parliamentary timings, the ground rent cap could come into force in late 2028.
Ministers said they will continue engagement with stakeholders during scrutiny and consultation on areas including limited exemptions and transition to commonhold.
Sources: Ministry of Housing, Communities and Local Government, Prime Minister’s Office, 10 Downing Street, The Rt Hon Steve Reed OBE MP and The Rt Hon Sir Keir Starmer KCB KC MP.
Prepared by Ivan Alexander Golden, Founder of THX News, an independent news organisation delivering timely insights from global official sources. Combines AI-analysed research with human-edited accuracy and context.
