The latest news on the abolition of ground rent

This post explains what leaseholders need to know about plans to abolish ground rent that are applicable to both England and Wales.

Although the Leasehold Reform (Ground Rent) Act 2022 abolished ground rent for leases granted after 20 June 2022, promises by the Conservative government to restrict ground rent to a peppercorn in what is now the Leasehold and Freehold Reform Act 2024 did not materialise.

On 27 January 2026, Sir Keir Starmer announced on Tik Tok and via a more conventional press release that the government would be capping ground at £250 a year for pre-2022 leases, changing to a “peppercorn cap” after 40 years. This will be via the new draft Commonhold and Leasehold Reform Bill.

Here is a link to the Policy Statement: Addressing unregulated and unaffordable ground rent, which estimates that 770,000 to 900,000 leaseholders pay ground rent of more than £250 per year.

This follows the government’s King’s Speech in 2024 which contained a commitment to “tackle existing ground rents” in a new Commonhold and Leasehold Reform Bill which would “regulate ground rents for existing leaseholders so they no longer face unregulated and unaffordable costs”.

The post explains what ground rent is, why it’s so unpopular with leaseholders, and explains how the new Commonhold and Leasehold Reform Bill proposes capping ground rents for leases granted before 30 June 2022.

I update this post regularly.

>> Related Post: Leasehold and Freehold Reform Act Timeline and Implementation

>> Related Post: What will be in the new Commonhold and Leasehold Reform Bill?

Last updated: 27 January 2026

What is ground rent?

Ground rent is a sum which the owner of a leasehold property pays each year to the owner of the freehold. Unlike the service charge, the freeholder does not need to provide a service in return.

Historically, ground rents were of a low or nominal value paid under a long lease that was granted for an up front sum (a premium) which was the market value of the lease.

However, this has changed in recent decades, and the 2023/24 English Housing Survey reported that average (mean) ground rent for all leaseholders was £304 per annum and the median was £120 per annum.

How many leaseholders pay ground rent in England and Wales?

According to the Ground Rent Policy Statement, there are approximately 3.8 million leasehold properties with a ground rent obligation across England and Wales. The statement estimates that around 770,000 to 900,000 leaseholders pay over £250 pery ear, of which 490,000 to 590,000 are in London and the South.

The government estimates leaseholders paid over £600m in ground rents in 2025.

Why is ground rent so unpopular with leaseholders?

If ground rate increases over time by inflation or by a set amount (eg doubling every x years), this can make the property less attractive to buyers and difficult to mortgage.

In a survey of 219 member agents in March 2023 by Propertymark, 78% said that a leasehold property with an escalating ground rent will struggle to sell, even if priced correctly.

What are doubling ground rent clauses?

Before 30 June 2022, leases often contained clauses obliging leaseholders to pay a rent which doubled after a set periods of time. For instance, if it started at £250, and doubled every 10 years, this could become £2,000 after only 30 years. These are referred to as doubling ground rent clauses.

These clauses are very unpopular with lenders (eg Nationwide). Consequently, onerous clauses can make a property difficult to sell to anyone other than a cash buyer, unless the freeholder agrees to amend the clause.

Although the Leasehold Reform (Ground Rent) Act 2022 introduced a ban on ground rent, the ban only benefits leases granted on or after 30 June 2022.

Ground rent for leases granted after 30 June 2022

The Leasehold Reform (Ground Rent) Act 2022 abolished ground rent for leases granted on or after 30 June 2022.

The only permitted rent for leases granted from 30 June 2022 is a “peppercorn rent”, which Section 4(3) of the Act states is “one peppercorn”.

How will Commonhold and Leasehold Reform Bill abolish ground rent ?

Ground rent has already been abolished for new leases granted after 30 June 2022 under the Leasehold Reform (Ground Rent) Act 2022, but it’s currently still in place for existing leases.

The government announced on 27 January that ground rent will be abolished for leases which date before the 2022 Act (referred to as pre-2022 Act leases” in a new draft Commonhold and Leasehold Reform Bill. This Bill also deals with commonhold and the abolition of forfeiture, and will now be subject to “pre-legislative scrutiny, expected to be carried out by the HCLG Select Committee” in January.

The government press release states that “subject to parliamentary timings, the ground rent cap could come into force in late 2028”.

The proposed mechanism in the Schedule 13 of the draft Commonhold and Leasehold Bill is to extend the Leasehold Reform (Ground Rent) Act 2022 for the regulation of ground rent under that Act to leases granted before that Act came into force.

The proposal is for there to be a “permitted rent” for pre-2022 Act leases of an annual rent of £250 for the “transitional period”. “Pre-2022 Act leases” are those granted on or after the commencement of the 2022 Act of 30 June 2022 for leases other than that of a retirement home.

The “transitional period” is defined as “the period of 40 years beginning with the 2026 Act commencement day”.

When it comes into force, ground rent will be capped at £250 pa, and after 40 years, it will be reduced to a peppercorn.

>> Related Post: The end of ground rent “AST trap” evictions for leaseholders

When will ground rent be abolished for pre-2022 leases?

Labour’s first King’s Speech contained a commitment to “tackle existing ground rents” in a new Commonhold and Leasehold Reform Bill, which would “regulate ground rents for existing leaseholders so they no longer face unregulated and unaffordable costs”.

The Prime Minister confirmed on 27 January 2026 that ground rents would be capped at £250 in the new Commonhold and Leasehold Reform Bill, and may come into force in “late 2028”.

Ground rent will then reduce to a “peppercorn” after 40 years.

Leases granted since 30 June 2022 are already only permitted to have peppercorn rents, so this new rule will affect leases granted before then.

Competition and Markets Authority investigation into doubling ground rent clauses

The Competition and Markets Authority (CMA) launched an investigation in 2019 into possible breaches of consumer protection law by several housing developers relating to doubling ground rent clauses, and many entered into undertakings to remove these clauses from the leases, and not to increase the amount.

The list includes include investment firms who bought freeholds originally owned by housing developers Countryside, Crest Nicholson, Miller Homes, Redrow, Taylor Wimpey, and Vistry.

However, these were for the worst clauses where ground rents double every 10-15 years, and not those onerous clauses where they double every 20-25 years, which will now be dealt with in the draft Commonhold and Leasehold Reform Bill.