02920 829 100 
The future of ground rents: key changes for leaseholders, landlords and investors
March 24, 2026
By Siôn Fôn
The UK Government’s announcement on 27 January 2026 marks significant changes to the leasehold system in England and Wales.
Under the proposals, ground rents for existing residential leaseholders will be capped at £250 per year, with the measure forming a central part of the draft Commonhold and Leasehold Reform Bill.
This announcement is the latest in a series of reforms aimed at modernising homeownership and builds on the work done with the Leasehold and Freehold Reform Act 2024, which aimed to improve transparency over service charges and strengthened leaseholder rights.
The intention is to tackle unregulated and unaffordable ground rent charges and bring an end to what has been described as an outdated “feudal leasehold system.” The Bill also seeks to alleviate cost‑of‑living pressures, reduce barriers to selling and mortgaging leasehold properties, and ultimately abolish ground rents altogether.
Our commercial property expert, Siôn, breaks down what these changes mean in practice for leaseholders, landlords and property investors.
Ground rent is an annual fee paid by leaseholders to the freeholder for the right to live on land they do not own. It is distinct from service charges, because no service is required in return.
While ground rents were abolished for most new leasehold homes in June 2022, they continue to apply to millions of existing residential leasehold properties. Ground rents can vary significantly – some are fixed in value, while others increase over time. Annual payments can range from a peppercorn (no financial value) to over £1,000 per year.
The draft Bill proposes several key reforms:
Easier conversion to commonhold –The Bill aims to overhaul and simplify the commonhold structure. Under commonhold, flat owners hold the freehold of their own unit while collectively managing shared areas through a commonhold association.
Forfeiture, where leaseholders can lose their home over debts as small as £350, will be abolished. A new enforcement regime will be introduced to ensure fairness between landlords and leaseholders.
These reforms are expected to save hundreds of pounds a year for millions of households and give them more certainty. There are currently around five million leaseholders in England and Wales, and nearly one million are expected to benefit from immediate reductions once the ground rent cap is fully implemented.
If enacted as proposed, the Bill will provide stronger protections and increased control for millions of leaseholders over their homes.
Leasehold campaigners argue that waiting 40 years for a peppercorn ground rent is too long. The Government has described the 40‑year transition as a deliberate compromise necessary to avoid a sudden collapse in asset value for freeholders and investors.
The Bill will undergo scrutiny by MPs on the Housing Committee, and the Government has stated that they expect the cap to come into force in late 2028.
The publication of the draft Bill marks a major step towards modernising leasehold homeownership in England and Wales. While the legislation will face scrutiny and likely challenges regarding the ground rent cap, it nevertheless represents a significant shift in power towards leaseholders.
For many, the reforms offer the promise of:
For property owners, investors and developers alike, early awareness and planning will be key to navigating these changes effectively.
For bespoke advice on any of the above, get in touch with one of our experts today using the contact form or via 029 2082 9100 to see how we can help you or your business.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
