PM Keir Starmer Announces £250 Cap on Ground Rents in Major Leasehold Reform to Ease Cost-of-Living Pressures.
London:
The Prime Minister Keir Starmer has announced a £250 annual cap on ground rents, describing it as a game-changing reform of the leasehold system aimed at supporting families struggling with the cost of living and tackling long-standing unfair practices in the housing market.
The move builds on the Leasehold Reform (Ground Rent) Act 2022, which ended ground rents for most new long residential leases. The latest announcement shifts focus to older existing leases, where many homeowners continue to face high and unaffordable ground rents that have increased financial pressure and reduced property value.
Under the proposed reforms, ground rents on existing leases will be capped at £250 per year, preventing excessive charges while ensuring greater transparency and fairness for leaseholders. The government has clarified that while it will engage with stakeholders during the pre-legislative scrutiny process, particularly on the treatment of so-called quid pro quo leases—where a lower purchase price was offered in return for higher ground rents—this engagement will not be an open door for widespread exemptions.
As part of the wider overhaul, the government has reiterated its intention to ban the sale of new leasehold flats for residential homes. While the ban is expected to apply broadly, ministers acknowledged that there may be limited exemptions in specific circumstances where leasehold arrangements remain appropriate. These exemptions will be examined through a consultation process.
Alongside this, the government has launched the “Moving to Commonhold” consultation, inviting views on the detailed implementation of the leasehold flat ban. The consultation will consider when the ban should come into force, how to ensure a smooth transition to commonhold, and whether any narrowly defined exemptions are necessary to safeguard the delivery of much-needed new housing supply.
The Prime Minister said the reforms mark a decisive step towards ending unfair practices in the leasehold system, restoring confidence among homeowners, and making home ownership fairer, simpler and more affordable for millions across the country.
