Speed up 250 cap on leasehold ground rent, MPs urge

A planned 250 cap on yearly ground rents paid by leaseholders in England and Wales should be introduced sooner, with a target of late 2027 rather than late 2028. Around five million leasehold homes exist, where residents own the right to occupy a property under a lease from a freeholder. Ground rents are separate from service charges and are often structured to double or rise with RPI inflation at set intervals, creating difficulties for selling or obtaining mortgages. Ground rents were abolished for most new residential leasehold properties in 2022, but they remain for existing leasehold homes. A draft Commonhold and Leasehold Reform Bill would also ban the sale of new leasehold flats and make conversion to commonhold easier, where buildings are jointly owned without an expiring lease.

"A planned 250 cap on yearly ground rents paid by leaseholders in England and Wales should be introduced more quickly, a committee of MPs has urged. The government has said it expects the limit on ground rents - an annual fee paid by leaseholders to their freeholder - to come into force in late 2028. However, a report by the cross-party Housing, Communities and Local Government Committee said this should be brought forward to late 2027, arguing leaseholders have waited too long for successive governments to tackle the issue."

"There are around five million leasehold homes in England and Wales, where people own the right to occupy a property via a lease for a limited number of years from a freeholder. As well as capping ground rents, the government's draft Commonhold and Leasehold Reform Bill, which is being scrutinised by the committee before it is introduced to Parliament, would ban the sale of new leasehold flats. It also aims to make it easier for people to convert to commonhold, where people jointly own and take responsibility for their buildings without an expiring lease."

"Ground rents are paid for the right to occupy the land on which a building sits and are separate to service charges, which cover the management and maintenance of a building. The English Housing Survey estimated that in 2023/24 the average annual ground rent was 304 a year. However, it is common for ground rents to double or increase by RPI inflation at fixed intervals, which can make it difficult to sell or get a mortgage for a property."

"Ground rents were abolished for most new residential leasehold properties in England and Wales in 2022 under the previous Conservative government, but remained for existing leasehold homes. Under the current draft version of the bill, the 250 cap would come into effect on a"

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