Britain27 January, 20262 min read
Keir Starmer Caps Ground Rents at £250 for England and Wales Leaseholders
Ground rents for leaseholders in England and Wales will be capped at £250 annually. Government will ban new leasehold flats and let existing leaseholders convert to commonhold.
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Commonhold and leasehold reform
The UK government has published a draft Commonhold and Leasehold Reform Bill that would cap residential ground rents in England and Wales at £250 a year, ban the creation of new leasehold flats and give existing leaseholders the right to convert to commonhold. Prime Minister Sir Keir Starmer announced the measures on TikTok and framed them as relief for household budgets. The draft bill also proposes abolishing forfeiture for small debts and a staged move to reduce ground rents to a peppercorn (effectively zero) over a 40-year period.
“Cap residential ground rents at £250 a year, then reduce them to a peppercorn (effectively zero) after 40 years.”
Ministers say the changes aim to make homes easier to sell and give homeowners greater control. The government describes the package as helping many households save hundreds a year and as part of a wider effort to modernise the leasehold system.
Leasehold ground-rent impact
Ministers and official estimates set out the scale of who is affected and the potential savings. The government says about 3.8 million leasehold properties in England and Wales carry ground-rent obligations. Roughly 770,000–900,000 leaseholders are currently paying more than £250 a year.
Some outlets say about one million people will see immediate cuts, and many households could save hundreds or even several thousand pounds over a lease. The government and several reports project large aggregate savings across lease terms, with figures such as up to around £12.7bn cited. They also note that leaseholders paid over £600m in ground rents last year.
Responses to leasehold cap
Industry and investor responses are mixed, with freeholder and investor groups such as the Residential Freehold Association (RFA) and industry reports warning that a retrospective cap interferes with property rights and could damage investor confidence, and insurer-investor M&G estimating a one-off write-down and ongoing profit impact.
“Supporters — including the HomeOwners Alliance, Propertymark, Property Redress and several lawyers — welcomed the cap as long‑overdue relief for leaseholders.”
By contrast, consumer groups, property bodies and regulators — including the Competition and Markets Authority, Propertymark, the HomeOwners Alliance and enfranchisement practitioners — welcomed the cap as overdue and likely to improve saleability and fairness for leaseholders.
Peppercorn rent reform timeline
Timing, legal detail and next steps remain uncertain. The draft bill will be subject to consultation and parliamentary scrutiny. Several sources caution the measures are phased, with ministers suggesting parts could take effect by late 2028 and the full move to peppercorn rents spread across decades.
Some reports note that leases granted since 30 June 2022 were already limited to peppercorn rents. Campaigners express disappointment that immediate, universal peppercorn treatment was not introduced.
Housing package reactions
The package fulfils a 2024 Labour manifesto pledge and responds to pressure from backbenchers seeking visible action on housing costs. Starmer’s decision to announce it on TikTok was widely noted as an unusual move for a British prime minister and underlines the government’s focus on communicating consumer benefits. Commentators and sector pieces frame the move variously as a cost-of-living win for households, a necessary fix to a 'feudal' leasehold relic, or a controversial retroactive change that could unsettle investors and pension funds.
“Posting the announcement on TikTok ... Starmer said the cap would save many people 'hundreds of pounds'.”