£250 ground rent cap from 2028 welcomed by leasehold campaign groups

In response, the National Leasehold Campaign (NLC) said the £250 cap will “offer relief” for leaseholders paying high ground rents, but expressed disappointment in the government’s decision not to introduce peppercorn ground rents sooner.

Katie Kendrick, co-founder of the NLC, said: “While today’s announcement on ground rents falls short of immediate peppercorn ground rents, this bill as a whole is another step forward in dismantling the leasehold system in England and Wales.”

Jo Darbyshire, NLC co-founder, said the cap “will make a difference”, particularly for people who bought new build properties in the past 20 years with “punitive ground rents”.

She added: “And let’s remember that ground rent is a charge for no service. It’s money for nothing. It’s also encouraging that the government recognises that monetary ground rents must end. However, 40 years is an incredibly long time to wait for peppercorn ground rents.”

The NLC also welcomed the government’s plans to abolish the “draconian threat of forfeiture” and to consult on banning leasehold flats.

Liam Spender, the lawyer behind the Leaseholder Action claim, said the £250 cap “sounds the death knell for leasehold in England and Wales”.

He said: “Some will no doubt be disappointed that ground rents are not being eliminated immediately and are instead being phased out over 40 years. 

“However, crucially the cap will make it cheaper for people to buy the freehold and to extend their leases, both of which are priced by reference to ground rent values.

“Ending ever-increasing ground rents should also make flats easier to sell and mortgage because there is often a need to vary ground rent terms simply to get transactions over the line.”

Some campaign groups were happier than others with the news. Harry Scoffin, founder of campaign group Free Leaseholders, said: “The history of leasehold reform shows that governments leave action until the last minute, with proposals hanging in the balance before elections and leaseholders ultimately left with thin legislation.

“A ground rent cap not taking effect until the end of 2028 is far too close to the next general election, repeating the foot-dragging of governments of old.”

The Ministry of Housing, Communities and Local Government also said the draft bill will introduce a new process making it easier for existing leaseholders to convert to commonhold.

This will come under a “revamped commonhold model” where homeowners receive a stake in the ownership of their buildings and will be given “a stronger say in the issues that affect them”.

The draft bill will now move into pre-legislative scrutiny, expected to be carried out by the Housing, Communities and Local Government Committee.

Steve Reed, housing secretary, said: “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 homeownership for so many. We are taking action where others have failed – strengthening homeownership and calling time on leasehold for good.”