The ground rents cap

On 27 January 2026, the government announced proposals for further reforms to the leasehold system in England and Wales. Among other changes, it announced that it intends to cap ground rents at £250 a year (with some limited exceptions), changing to a peppercorn (zero financial value) cap after 40 years.

In a statement, the Minister for Housing and Planning, Matthew Pennycook, explained this was to deliver on the government’s mandate to “tackle unregulated and unaffordable ground rent charges”.

The measure will be included in the draft Commonhold and Leasehold Reform Bill, which was published on 27 January 2026. A draft bill is an early version of a bill, which the government publishes to get feedback on its proposals. The draft bill will be subject to pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee.

What are ground rents?

In England and Wales, most flats are owned on a leasehold basis. While leasehold houses are fairly rare nationally, there are some areas where leasehold houses are more common.

As explained by the consumer organisation the HomeOwners Alliance, ground rent is “a fee paid by a leaseholder to the freeholder for the right to occupy the land their property is built on”. The lease agreement will set out the amount of ground rent payable and the basis for increases over the term of the lease. There is no requirement for a freeholder to provide a service in return for this payment.

The Leasehold Reform (Ground Rent) Act 2022 put an end to ground rents for most new residential leasehold properties in England and Wales, but ground rents in older leases still exist.

The English Housing Survey (EHS), a representative survey of housing stock in England, reported that in 2023/24 an estimated 23% of leaseholders paid zero ground rent. The other 77% of leaseholders reported paying ground rent, including very low rents (peppercorn rents).

Among leaseholders who paid ground rent in 2023/24, median ground rent for all leaseholders was £120 per year in England. However, the mean ground rent was £304 per year. The median is a useful measure as it is the point at which half of rents are higher and half are lower. The median figures for ground rents are lower than mean figures, demonstrating that average ground rent can be positively skewed by outlying cases (few leasehold properties paying much higher ground rents).

The EHS only provides average ground rents at regional level. For more information, see section 1 of the MHCLG leasehold experience factsheet of the English Housing Survey 2023 to 2024.

The government highlights that ground rents can “vary significantly” in their terms (PDF); some are of a fixed value while others can increase over the term of the lease.

How many people would be affected by the proposed cap?

The government has estimated that there are approximately 3.8 million leasehold properties with a ground rent obligation across England and Wales. However, the ground rents cap would only immediately affect leaseholders whose ground rent is over £250 when the ground rent cap comes into force. The government has indicated that, subject to parliamentary approval, this could be in “late 2028”.

Alongside the draft Commonhold and Leasehold Reform Bill, the government published a policy statement on addressing unregulated and unaffordable ground rent. In the document, the government estimates “around 770,000 to 900,000 leaseholders pay over £250 per year, of which 490,000 to 590,000 are in London and the South”. It also estimates over £600 million was paid by leaseholders in ground rents in 2025.

It is currently not possible to estimate how many leaseholders would be affected by the ground rents cap at a local level. HM Land Registry does hold data on the number of properties sold in an area on a leasehold basis, however this data does not reflect the total number of leasehold properties in England and Wales, it only shows that which were sold since 1995 and then registered with the Land Registry. Nor does the Land Registry data provide information on the number of leasehold properties where the ground rent is over £250.

For wider commentary and constituency statistics for 2024, see the Library briefing on statistics on leasehold housing in England, and the spreadsheet attached to the landing page.

What would the potential savings be for leaseholders?

According to government estimates, leaseholders in around 3.8 million properties across England and Wales would save between £10.0 billion and £12.7 billion from the proposal to cap ground rents at £250 and change to a peppercorn rent after 40 years. This is assessed over the full lifetime of leases and assumes that the cap comes into force in 2028.

Further information

In the policy document, the government has said an impact assessment and response to the Conservative government’s 2023 ground rent consultation will be published in due course.

The Library has published Leasehold reform in England and Wales: What’s happening and when? which provides more detailed information about leasehold reform.

The Library briefing on the Leasehold Reform (Ground Rent) Bill 2021-22 provides further information about ground rents.