The Government has announced sweeping reforms to England and Wales’ leasehold system, aiming to curb high ground rents and phase out leasehold for new flats.
Under the plans, ground rents on new long residential leases will be capped at £250 a year from 2028, before reducing to a peppercorn cap after 40 years. The Government says the move will tackle unaffordable and escalating charges while balancing the impact on existing contracts and investments.
Around 3.8 million leasehold properties currently carry a ground rent obligation, with leaseholders paying more than £600m a year. While the changes will affect developers, landlords, managing agents and investors who trade ground rents as assets, the reforms will not apply retrospectively. Existing leaseholders will not see their current arrangements automatically changed.
The Prime Minister, Keir Starmer, said the reforms would help with the cost of living, claiming some families could save hundreds of pounds a year. He also confirmed that new leasehold flats will be banned, describing the system as a “feudal” model rooted in medieval times. The ban will apply to new builds and certain conversions, although build-to-rent and social housing schemes will be exempt. Commercial property is unaffected.
Existing leasehold flats will remain, but leaseholders will gain new routes to take control of their buildings. The Government plans to make conversion to commonhold easier by reducing the consent threshold from 100% to 50%. This would allow a majority of residents to move to a shared-ownership structure.
Further proposals include abolishing forfeiture, preventing leaseholders from losing their homes over small debts, and introducing a fairer enforcement regime. A consultation on the transition to commonhold is now open.
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