The End of Ground Rents

Shilpa Mathuradas

Ground rent reform has come in stages. New leases granted from 30 June 2022 cannot charge a ground rent above a peppercorn. The Leasehold and Freehold Reform Act 2024 made it cheaper and simpler for existing leaseholders to extend their leases or buy out their ground rent. The draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, proposes to go further and cap ground rents on existing leases too.

Ground rents on new leases: the 2022 Act

The Leasehold Reform (Ground Rent) Act 2022 came into force on 30 June 2022. It bans landlords from charging a ground rent above a peppercorn (effectively nil) on most new residential long leases.

The Act applies to a “regulated lease”, which is a long lease (granted for more than 21 years) of a single dwelling, granted for a premium on or after 30 June 2022 or pursuant to a contract before that date. Excepted leases include certain business leases, statutory lease extensions of houses or flats, community housing leases and home finance plan leases.

If a landlord demands a ground rent in breach of the Act, or fails to return a prohibited payment within 28 days of receipt, Trading Standards can impose fines of between £500 and £30,000. Action can be taken against past and current landlords and against any person acting on their behalf.

A variation of an existing pre-2022 lease that amounts to a deemed surrender and re-grant, for example varying the extent of the land demised or extending the term, can convert the lease into a regulated lease and inadvertently bring it within the Act. Landlords and leaseholders both need to take advice before agreeing significant variations.

The 2022 Act is not retrospective. A lease granted before 30 June 2022 can still demand an uncapped ground rent under its existing terms.

Existing leases: what changed under the 2024 Act

The Leasehold and Freehold Reform Act 2024 is now in force and made it cheaper for existing leaseholders to deal with their ground rent. The most important changes for ground-rent purposes are:

• Marriage value abolished: leaseholders extending leases with fewer than 80 years remaining no longer have to pay marriage value as part of the premium, which is the single biggest saving for short-lease owners.
• Ground rent capped in the valuation: in the premium calculation for a statutory lease extension or collective enfranchisement, the ground rent is now capped at 0.1% of the property value, which limits what freeholders can recover.
• 990-year lease extensions: the statutory lease extension has been increased from 90 years to 990 years.
• Two-year ownership condition removed: leaseholders can apply to extend immediately after purchasing, rather than waiting two years.
• Ground rent buyout right: leaseholders with at least 150 years left on their lease can buy out the ground rent without also extending the term.

Together these changes substantially reduce the cost of dealing with ground rents on existing leases. They do not cap the ground rent itself while the lease continues, but they make it cheaper to extinguish.

What is proposed next: a £250 cap on existing leases

The draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, proposes to cap ground rents on existing leases at £250 per year, with the rent falling to a peppercorn after 40 years.

The cap could come into force in late 2028, subject to parliamentary timings. It is the most significant change to existing leaseholders’ position since the 2024 Act, and would mean that a leaseholder paying £400 or £500 per year today would see their ground rent fall to £250 once the cap takes effect, and eventually to a peppercorn.

The cap is a proposal, not yet law. The draft Bill is in pre-legislative scrutiny and consultation between 27 January and 24 April 2026, with the final Bill expected to be introduced in autumn 2026.

Should I act on my ground rent now?

For most leaseholders, acting under the 2024 Act framework today is the safer choice. Marriage value has gone, lease extensions are cheaper, and waiting for the £250 cap carries timing risk. If your lease has fewer than 80 years remaining, the case for extending now is strong: the lease is depreciating, and you can take advantage of the marriage value abolition without delay.

For leaseholders with longer leases and a modest ground rent, waiting for the £250 cap may make sense. The ground-rent buyout right under the 2024 Act is also available without extending the term, where the lease has at least 150 years remaining.

Specialist advice on your specific position is worth taking before either acting or waiting.

Speak to our leasehold team

If you would like to discuss your ground rent, extend your lease, or buy out your ground rent under the 2024 Act, our leasehold dispute solicitors can advise you. Contact Shilpa Mathuradas or call us on 020 7485 8811.