Millions of homeowners across England and Wales are set to reclaim control of their properties as the Government unveils the Commonhold and Leasehold Reform Bill.
In a move described as a "fundamental rewiring" of the property market, Prime Minister Keir Starmer announced this morning that ground rents will be capped at £250 per year, eventually transitioning to a "peppercorn" rate (effectively zero) after 40 years.
The legislation aims to dismantle a "feudal" system dating back to medieval times, providing over five million leaseholders with greater financial security and legal protection.
For years, many leaseholders have been trapped by "doubling" ground rent clauses that made their homes virtually unmortgageable and impossible to sell. Under the new draft Bill:
- Annual Cap: Ground rents are limited to £250 immediately.
- Long-term Phase-out: After 40 years, these charges will fall to a peppercorn rate.
- Massive Savings: The government estimates some families will save over £4,000 over the duration of their lease.
Keir Starmer, speaking via TikTok, emphasised that the cost of living remains the nation’s "single most important issue," noting that the cap will stop residents from paying "over the top bills for no clear service in return."
Housing Secretary Steve Reed also commented:
“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.
“The leasehold system has tainted the dream of home ownership for so many. We are taking action where others have failed –strengthening home ownership and calling time on leasehold for good.”
The Bill effectively bans the sale of new leasehold flats, pivoting the UK property market toward a revamped commonhold model.
Unlike leasehold, commonhold allows residents to own a permanent stake in their building. This shift gives homeowners a direct say in annual budgets, management decisions, and repair schedules. Existing leaseholders will also be granted a new, simplified process to convert to commonhold, provided a majority of residents agree.
In one of the most significant legal shifts, the government will abolish forfeiture. Currently, a leaseholder can lose their entire home and all built-up equity over a debt as small as £350.
A new enforcement regime will replace this "unbalanced" system, ensuring that disputes between landlords and leaseholders are handled fairly without the threat of homelessness looming over minor arrears.
These reforms build upon the Leasehold and Freehold Reform Act 2024 and the Renters’ Rights Act, creating a more transparent landscape for both buyers and renters.
Image credit: iStock
