Open a service charge pack from a managing agent this year and you will usually find, buried two or three pages in, a separate demand for something called "ground rent" — often £150, £300, sometimes £600 a year, for nothing more than the freeholder's continued goodwill. Millions of leaseholders in England and Wales pay it without ever quite knowing what it buys them, because in most modern leases it buys nothing at all. That arrangement is now, finally, on a legislative clock.
On 27 January 2026 the government published the draft Commonhold and Leasehold Reform Bill, setting out a cap on ground rent for existing long leases at £250 a year, falling to a peppercorn — legally, zero — after forty years. Sir Keir Starmer confirmed the headline figure the same day, and the King's Speech on 13 May formally committed the government to bringing the Bill before Parliament in the 2026-27 session. The Housing, Communities and Local Government Select Committee then spent four months on pre-legislative scrutiny, publishing its report on 27 May 2026 with a conclusion that will sound familiar to anyone who has followed leasehold reform since the 2024 Act: progress, but not enough of it, and not fast enough.
What the cap actually covers
The £250 figure applies to long residential leases granted before 30 June 2022 in England and Wales — leases written since that date are already restricted to a peppercorn rent under the Leasehold Reform (Ground Rent) Act 2022, so this Bill closes the gap for everyone who bought earlier. The government's own policy statement, published alongside the draft Bill, puts the number of affected leaseholders at somewhere between 770,000 and 900,000 — people currently paying ground rent above £250 a year, some considerably above it after doubling clauses baked into leases sold through the 2000s and 2010s pushed original £50 or £100 rents into four figures within a decade or two.
Crucially, there is no compensation on the table for freeholders. The policy statement is explicit that the reforms "will not require landlords to compensate leaseholders for any past ground rent paid in excess of the cap" — which cuts the other way too: freeholders who have built future income streams into pension funds and investment vehicles around escalating ground rents get no payout for the rent they will no longer collect. Institutional freeholders and the pension funds holding ground rent portfolios have already flagged this as a real financial hit, not a technicality, and expect legal challenges once the Bill is enacted.
The forty-year taper
The cap does not drop to zero immediately. A lease currently charging, say, £400 a year would be capped at £250 straight away, then step down to a peppercorn over a forty-year taper written into the Bill. The mechanics of that taper — whether it is a straight-line reduction or a stepped one — are still being worked through in the secondary legislation the government has promised, and the Commons Library briefing on the Bill notes this is one of several areas where the detail simply is not there yet.
Commonhold becomes the default — but only for new flats
The second pillar of the Bill is more structural: commonhold, a tenure that lets flat owners collectively own and manage the freehold of their building rather than answering to a separate landlord, becomes the default for new flats in England and Wales. New leasehold flats are effectively banned going forward. This is not a small change. Commonhold has existed in law since 2002 and has been used in fewer than 20 developments in over two decades, mostly because developers had no incentive to give up the ground rent income and management fees that leasehold generates. Making it the default flips that incentive structure entirely, and a separate consultation on the reformed commonhold model — closing 24 April 2026 — is looking at "sections" within a single commonhold building, so that a block with ground-floor retail units and residential flats above can split management responsibilities between the two rather than forcing every owner into identical service charges. Developers have not exactly welcomed the change. Losing the ground rent income line does something to a development appraisal that housebuilders are quietly recalculating right now, and it would not be surprising if new-build service charges on commonhold blocks come in higher than the leasehold equivalents estate agents have been quoting buyers for the past decade, simply because the building's running costs have to be recovered somewhere.
What the Bill does not do is convert existing leasehold flats to commonhold automatically. If you already own a leasehold flat, this reform changes your ground rent bill but not your tenure — you would still need to go through lease extension or collective enfranchisement to get out of leasehold entirely, and those processes remain largely unchanged by this Bill. Anyone hoping the Commonhold and Leasehold Reform Bill quietly converts their existing lease has misread what it does.
Forfeiture is going too
A leaseholder can, under the current law, lose a flat worth £400,000 over a service charge dispute worth £2,000.
Buried lower in the draft Bill, and covered less in the general coverage than the ground rent headline, is the abolition of forfeiture — the mechanism that currently allows a freeholder to seize a leaseholder's flat entirely, sometimes over a dispute that would barely register in a small claims court. Forfeiture has been widely criticised by housing lawyers for years as wildly disproportionate to the debts it is used to enforce. Removing it is arguably the single most consequential change in the draft Bill for anyone who has ever fallen behind on payments during a job loss or a dispute over disputed charges, even though it will generate far fewer headlines than the £250 figure. Freeholders lose their strongest enforcement tool as a result, and the Bill proposes replacing it with a system closer to standard debt recovery — county court judgments and charging orders rather than repossession.
What changes from 2027, regardless of the ground rent timetable
Several provisions in the draft Bill are scheduled to land well before the ground rent cap itself, which the government still expects no earlier than late 2027 and possibly into 2028, subject to Royal Assent and the secondary legislation being finalised. From 2027:
- Landlords will have to issue leaseholders an annual report on the building's condition and any planned major works — no more discovering a £15,000 cladding remediation bill with zero warning.
- A standardised service charge demand form will be mandatory, setting out precisely what each charge line covers rather than the vague "management fee" and "sinking fund contribution" entries many leaseholders currently receive.
- Leaseholders gain protection from paying a landlord's legal costs in a dispute they did not initiate, unless a tribunal specifically allows it.
- Landlords must supply certain building safety information on request, including fire safety records going back up to six years — a direct legacy of the post-Grenfell building safety reforms working their way through the system, and one of the few provisions here that touches building safety rather than cost.
These are, if anything, more immediately useful to most leaseholders than the ground rent cap, because they apply within months of Royal Assent rather than after a multi-year taper.
The Committee's verdict: not far enough
The Housing, Communities and Local Government Select Committee's scrutiny report, published 27 May 2026, praised the Bill as "a significant step towards giving leaseholders greater control of their buildings" — then spent most of its recommendations arguing the government needed to go considerably further and faster. Among the Committee's specific pushbacks: the forty-year taper is too slow given how long leaseholders have already waited since the 2024 Act, the definition of qualifying buildings for the commonhold "sections" model is drawn too narrowly, and the enfranchisement valuation consultation promised for summer 2025 — the one that determines how much leaseholders pay to buy out their freehold entirely — is still, as of the Committee's report, sitting unpublished a year late. That last point matters more than it might look. Ground rent reform addresses the annual bill; enfranchisement valuation addresses the lump sum a leaseholder pays to escape the lease altogether, and until that consultation lands, anyone weighing up whether to extend their lease now or wait for reform is essentially guessing at a moving target. The Committee also pressed the government on timing more broadly, pointing out that leaseholders were promised action in the 2024 Act, then told to wait for this Bill, and are now being told to wait again for secondary legislation before any of it actually reaches their post. Fair or not, that pattern is why the Committee's language reads as impatient rather than congratulatory.
What to actually do if you own a leasehold flat right now
Do not wait for the cap to take effect before checking your own lease — pull out the actual document, not the estate agent's summary from when you bought, and find the ground rent review clause. If it doubles every ten or fifteen years and was signed before June 2022, you are very likely one of the 770,000 to 900,000 people this Bill is aimed at, and the cap will materially reduce what you pay once it commences. If you are actively trying to sell a flat with an escalating ground rent clause in the next twelve months, get a solicitor to flag it in the pack now rather than after an offer falls through — mortgage lenders have grown considerably more cautious about escalating ground rent clauses since 2019, and buyers' solicitors routinely raise it as a red flag during conveyancing. Waiting for legislation that will not commence until late 2027 at the earliest is not a strategy if you need to complete a sale this year.