The government has published its initial draft of the Commonhold and Leasehold Reform Bill, promising capped ground rents and a ban on new leasehold flats. Here, we discuss the key proposals.
Published this week, the Commonhold and Leasehold Reform Bill promises greater controls and protections for over five million leaseholders and future homeowners, particularly around ground rents, tenure security, and commonhold conversion.
The most significant proposal is the plan to cap ground rents at £250 a year. While this is likely to offer relief to many homeowners and landlords of leasehold properties, the Residential Freehold Association has warned that the proposals represent “a wholly unjustified interference with existing property rights, which if enacted, would seriously damage investor confidence”.
Key Announcements in the draft Commonhold and Leasehold Reform Bill
- Ground rents will be capped at £250 a year, and then ultimately reduced to a peppercorn rate after 40 years
- A full ban on new leasehold flats
- Abolishment of forfeiture, in which currently leaseholders can lose their home and their built-up equity by defaulting on a debt as low as £350
- Introducing a simplified model to make it easier for existing leaseholders to convert to commonhold
The plans will not only mark the end of leaseholders paying high ground rents for little to no benefit, but also unlock property sales for those where ground rent terms have made homes more complicated to sell.
When will ground rents be capped?
The reforms are expected to be introduced in 2028, giving the sector ample time to prepare. However, as the Bill remains at draft stage, consultation responses and parliamentary scrutiny may lead to further amendments before it receives Royal Assent.
The next steps
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