What the announcement means for leaseholders
The government has announced what it describes as a “game-changing shake-up” of the leasehold system across England and Wales. At the centre of the reform is a proposed cap on ground rent at £250 per year, with ground rents reducing to a peppercorn after 40 years.
The announcement was made this week by Prime Minister Keir Starmer, alongside the publication of the draft Commonhold and Leasehold Reform Bill. So what does this mean in practice, and why does it matter? What is changing?
1. A cap on ground rent for existing leaseholders
For millions of leaseholders whose properties were sold with ongoing ground rent obligations, the government intends to: Cap ground rent at £250 per year, Reduce that ground rent to a peppercorn (effectively zero) after 40 years. This is aimed squarely at existing leases where ground rent has become a genuine financial burden, and, in many cases, a barrier to selling. The government estimates that many leaseholders could save thousands of pounds over the life of their lease, while also removing terms that have historically made some flats unmortgageable or unattractive to buyers.
2. New leasehold flats will be banned
The draft legislation also proposes an end to the creation of new leasehold flats, shifting future developments towards commonhold ownership instead. Commonhold allows residents to collectively own and control their building, rather than remaining subject to a freeholder, a model long seen as fairer and more transparent. Existing leaseholders will also be given a clearer, simpler route to convert to commonhold where a majority of residents agree.
3. Stronger protections for leaseholders
Alongside ground rent reform, the proposals include: Abolishing forfeiture, which currently allows leaseholders to lose their home over relatively small debts, Greater transparency and control over service charges and a new enforcement regime designed to rebalance the relationship between freeholder and leaseholder
Housing Secretary Steve Reed described the reforms as “calling time on leasehold for good” — language that reflects the scale of the ambition, if not yet the legal reality.
Is this law yet?
Not yet. This is a draft bill, published on 27 January, which means: The policy direction is clear, The detail will be scrutinised, amended and debated and timings for implementation will depend on the parliamentary process. In short: this is not an immediate change, but it is a strong signal of where the system is heading.
Why this matters for buyers and sellers
From a market perspective, ground rent has long been one of the quiet but significant friction points in leasehold transactions. High or escalating ground rents can: Reduce buyer confidence, Restrict mortgage availability and Delay sales or derail them entirely.
If implemented as proposed, these reforms should: Improve saleability of leasehold homes, Reduce long-term ownership costs, Restore confidence in flats that have previously been difficult to sell, and for many leaseholders, this could genuinely unlock moves that have been on hold for years.
Our view
Leasehold reform has been discussed for decades. What matters now is not the headline, but the detail, delivery and timescale. This announcement represents a meaningful step towards a fairer system, but leaseholders should continue to take advice based on the law as it stands today, not solely on what is proposed.
At Cooke Curtis & Co, we already factor ground rent terms, lease length and service charges into our pricing and strategy advice, because these issues directly affect value, demand and certainty. If you own a leasehold property and are unsure how these proposed changes might affect your home, now or in the future, we are always happy to talk it through clearly and honestly. If you would like an informed view on how your lease structure impacts saleability or value, just ask.
