The government has announced plans to cap ground rents at £250 a year, as part of its ongoing reform of leasehold.
A draft Commonhold and Leasehold Reform Bill has been published today which would see ground rents then change to a peppercorn cap after 40 years.
New leasehold flats will also be banned under the bill, with forfeiture also abolished.
Forfeiture is the process where leaseholders risk losing their homes and the equity they’ve built up by defaulting on debts as low as £350.
A new process will be introduced under this bill to make it easier for existing leaseholders to convert to commonhold. This will see homeowners receive a stake in the ownership of their buildings, and given a stronger say on the issues to affect them.
“The leasehold system has tainted the dream of home ownership for so many,” said Steve Reed, secretary of state for housing.
“We are taking action where others have failed — strengthening home ownership and calling time on leasehold for good.
This bill will now move into pre-legislative scrutiny, which is expected to be carried out by the HCLG Select Committee.
Subject to parliamentary timings, the ground rent cap could come into force by late 2028.
Ground rents have already been abolished for most new long residential leases under the Leasehold Reform (Ground Rent) Act 2022.
According to government calculations, the new bill could save some households up to £4,000 over the course of their lease.
