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 law, though most of its main reforms are not yet in force, and is intended to make 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 would no longer pay marriage value, the single biggest saving in the Act for short-lease owners. This is not yet in force, and marriage value remains payable today.
• Ground rent capped in the valuation. In the premium calculation for a statutory lease extension or collective enfranchisement, the ground rent would be capped at 0.1% of the property value. Not yet in force.
• 990-year lease extensions. The statutory extension would increase from 90 years to 990 years. Not yet in force, so an extension today adds 90 years.
• Two-year ownership condition removed. In force since 31 January 2025, so leaseholders can claim immediately after purchasing rather than waiting two years. This is the one reform on this list that already applies.
• Ground rent buyout right. Leaseholders with at least 150 years left on their lease would be able to buy out the ground rent without also extending the term. Not yet in force.

Together these changes would substantially reduce the cost of dealing with ground rents on existing leases once they are commenced. They would not cap the ground rent itself while the lease continues, but they would make it cheaper to extinguish. Until then, the existing 1993 Act rules and prices apply.

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?

The 2024 Act’s valuation reforms are not in force, so an extension or buyout today is priced under the existing rules and marriage value is still payable on a lease of 80 years or less. Waiting for either the valuation changes or the £250 cap carries timing risk, because neither has an announced commencement date.

If your lease is at or near 80 years, that risk cuts in one direction: the lease keeps depreciating and the premium keeps rising while you wait for a saving that is not yet available. Take advice on your own figures before deciding either way.

For leaseholders with longer leases and a modest ground rent, waiting for the £250 cap may make sense. Note that the 2024 Act’s ground-rent buyout right, for leases with at least 150 years remaining, is not in force yet either.

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.