Under leasehold reform ground rent UK rules, new long residential leases in England and Wales have been limited to peppercorn ground rent since the Ground Rent Act 2022, but most existing leases still require ground rent payment until further reforms take effect.
The Leasehold and Freehold Reform Act 2024 and the wider commonhold and leasehold reform agenda will reshape lease extensions, remove marriage value from calculations, and introduce a ground rent cap for many existing leases, though large parts are not yet in force.
The government’s current plan is to cap ground rents for existing leases at £250 per year, falling to peppercorn after 40 years, but the timing depends on the Commonhold and Leasehold Reform Bill and secondary legislation.
Axis Solicitors can advise on whether to extend a lease now, how much it cost to extend a leasehold, and options for buying out or reducing ground rent. We help homeowners interpret changing legislation for property matters and make confident decisions about their new leasehold flats and houses.
Understanding Leasehold: Ground Rent and How It Works
In England and Wales, a leaseholder owns their property for a fixed term granted by a freeholder, who owns the land. Around 4.8 million residential leasehold properties exist in England alone, and the majority still pay ground rent to their landlords.
Ground rent is a regular payment under the lease for using the land. It can be fixed, escalating, or subject to review. Some leases contain aggressive clauses, such as doubling every 10 or 25 years, which have made certain leasehold homes unmortgageable. Here are three common examples:
- A flat with a fixed ground rent of £250 per year, unchanged throughout the lease term.
- A lease with ground rent of £300 that doubles every 10 years, potentially reaching thousands within decades.
- A new flat sold after June 2022 with a peppercorn ground rent, meaning zero financial value.
Peppercorn ground rent is a nominal rent with no monetary cost. The government chose this as the standard for new long leases to protect homeowners from the burdens of the old leasehold system. Lease terms, ground rents and service charges are key elements our conveyancing solicitors investigate in every purchase and lease extension transaction.
Ground Rent Act 2022: Peppercorn Rents on New Leases
The reform ground rent act 2022 is the first major building block of modern leasehold reform ground rent UK, and it is already fully in force.
What the Act does:
- Bans most monetary ground rents on new long residential leases (over 21 years) in England and Wales from 30 June 2022.
- For most retirement housing, the ban applies from 1 April 2023.
- Replaces monetary ground rent with peppercorn ground rent on qualifying new leases.
Ground rent has ended for most new leases since June 2022. Business leases, community-led housing and certain financial product leases are excluded or treated differently. Crucially, the Act does not abolish or cap ground rents on existing leases. Existing leaseholders must keep paying until they extend, buy out their rent, or wider reforms take effect.
Enforcement is handled by local authorities and Trading Standards. Landlords face fines up to £30,000 for breaching ground rent regulations. Landlords cannot charge administration fees for collecting a peppercorn rent under the 2022 Act, although some other administration charges may still apply.
Freehold Reform Act 2024 and Commonhold & Leasehold Reform Plans
The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. It applies across England and Wales and will reshape leaseholder rights over the coming years.
Key aims of the Act:
- Standardise and simplify costs for statutory lease extensions and freehold purchases.
- Strengthen rights over service charges, buildings insurance commissions and estate management.
- Prepare the ground for commonhold and leasehold reform under a separate leasehold reform bill.
- Implementation of the Act’s provisions is expected by 2027 for many elements.
The draft Commonhold and Leasehold Reform Bill was published in January 2026 and formally announced in May 2026. This draft bill is intended to phase out the feudal leasehold system by making commonhold tenure easier and capping ground rents on existing leases. Pre legislative scrutiny by Parliament recommends introduction in autumn 2026.
Provisional timeline:
| Date | Milestone |
| 30 June 2022 | Peppercorn rent on most new long leases |
| 24 May 2024 | Freehold Reform Act 2024 receives Royal Assent |
| January 2026 | Draft Commonhold and Leasehold Reform Bill published |
| Late 2027 | Ground rent cap and key provisions expected in force |
| 2028+ | Full effect of remaining secondary legislation |
There have been High Court challenges by many freeholders to key valuation reforms, but early claims were dismissed in October 2025. Appeals are pending, which adds uncertainty, though the government has stated it will defend its position.
Ground Rent Reform for Existing Leases: Caps and Abolition Plans
Leasehold reform ground rent UK debates now focus on existing long leases, where leaseholders pay high or rising ground rents and are waiting for the ground rent cap to arrive.
Current proposals include:
- A statutory ground rent cap of £250 per year for existing leases.
- Ground rent will be reduced to zero (peppercorn) after 40 years from the cap taking effect.
- The cap applies to lease extensions as well as ongoing ground rent obligations.
These caps are not yet in force. The exact figures, start date and scope may change as the leasehold bill passes Parliament and secondary legislation is drafted. Proposed reforms aim to address legacy issues with high or escalating ground rents in older leases.
Consider a flat currently paying £750 per year with doubling clauses. Once the new legislation takes effect, the annual ground rent reduce to the £250 cap. The government also plans to abolish forfeiture for unpaid ground rent, removing one of the most feared penalties for leaseholders.
Some leaseholders will benefit more than others, depending on their existing rent level and how the government sets deferment and capitalisation rates through further consultation.
New Rights for Lease Extensions: 990-Year Terms and Ground Rent Buyouts
The Leasehold and Freehold Reform Act 2024 transforms the standard lease extension term. Leaseholders can extend leases for up to 990 years under new legislation, moving from the old 90-year model to a 990-year extension with ground rent for lease extensions reduced to zero.
Key legal changes:
- The previous 2-year ownership rule for statutory lease extensions and freehold purchases has been removed (in force since 31 January 2025).
- Leaseholders can request a 990-year lease extension at peppercorn ground rent.
- Leaseholders can buy out ground rent without extending their lease, provided more than 150 years remain.
- Ground rent for lease extensions is capped at 0.1% of property value for valuation purposes.
For example, if a property’s freehold vacant possession value is £200,000 and the leaseholder pays £800 per year in ground rent, the valuation treats the rent as capped at £200. This can substantially reduce the premium. A leaseholder with escalating ground rents could see how much it costs to extend a leasehold drop significantly, though final figures depend on the government’s prescribed capitalisation rates.
Our detailed guidance on the conveyancing process in the UK explains how lease extensions and enfranchisement follow a strict statutory conveyancing route.
Marriage Value Abolition and Enfranchisement Rights
Marriage value was the extra cost imposed when extending a lease with fewer than 80 years remaining. It represented the increase in property value created by the extension, which leaseholders previously had to share with their freeholder.
The Act abolishes the marriage value in lease extensions and freehold acquisition calculations. Marriage value will no longer be included in lease extension calculations, and leaseholders with short leases may see reduced extension costs as a result.
There have been legal challenges from freeholders to this change, but the High Court dismissed early claims in October 2025. Appeals could influence timing but are unlikely to reverse the policy direction.
Collective enfranchisement rights are also widened. More leaseholders in mixed-use buildings can now qualify, with the non-residential limit increased from 25% to 50%. This means flat owners in blocks with shops or offices on the ground floor have greater control over whether to buy the freehold together.
If your lease is approaching 80 years, waiting could still increase costs if you need to sell or remortgage. We recommend seeking advice promptly rather than assuming future reforms will solve the problem in time.
Service Charges, Managing Agents and Wider Leasehold Protections
Leasehold and freehold reform does not only target ground rent. Widespread complaints about opaque service charges and poor practice by managing agents have also driven new legislation.
Changes under the 2024 Act
- Standardised, itemised service charge statements for all landlords and managing agents.
- Stronger rights for leaseholders to request information about charges and insurance.
- Rules preventing landlords from automatically passing legal costs back to leaseholders through service charges.
- A commitment to regulating managing agents and challenging poor practice across the sector.
Leaseholders can already challenge unreasonable service charges or administration charges at the First-tier Tribunal (Property Chamber) in England, or its Welsh equivalent. Gathering evidence, such as comparable quotes and detailed breakdowns, strengthens any case.
Our property law team can review service charge demands, advise on prospects of challenge, and assist with tribunal applications where necessary.
Leasehold vs Freehold and Commonhold: What Buyers Need to Know
Understanding the difference between leasehold, freehold and commonhold is essential for anyone buying property today.
- Freehold means outright ownership of the land and buildings. For a full comparison, see our guide on what is freehold property in the UK.
- Leasehold means owning the property for a fixed term, subject to ground rent, service charges and the freeholder’s rules.
- Commonhold tenure is an alternative model where flat owners collectively own the building. Current leaseholders can switch to commonhold with majority agreement. The new commonhold model aims to give homeowners more control and the commonhold system will include strong management rules for buildings.
Conveyancers must now scrutinise remaining lease term, any current ground rent and escalation clauses, anticipated ground rent caps, and service charge history. Our property conveyancing services integrate up-to-date leasehold reform checks into all purchase and remortgage work.
Practical Decisions: Extend Now, Wait, or Buy Out Ground Rent?
The core dilemma created by leasehold reform ground rent UK is whether to act under current rules or wait for future reforms that may reduce costs but will not arrive for several years.
Three contrasting scenarios:
- A lease with 82 years unexpired and modest ground rent. Extending now preserves mortgageability and avoids the risk of the lease falling below 80 years, where historically marriage value would have applied. Waiting could save money once new valuation rules commence, but carries risk.
- A lease with under 80 years and high or doubling ground rent. This is the most urgent case. Even though marriage value will be abolished, every year lost reduces the lease term further and can harm saleability. Acting now under current statutory rights is often the safest approach.
- A flat with 150+ years remaining but an onerous ground rent clause. Under the new process introduced by the 2024 Act, leaseholders can buy out ground rent alone without extending. Waiting for the ground rent cap may be sensible here, as the lease term is not at risk.
Checklist for your decision
- Urgency of sale or remortgage
- Years remaining on the lease
- Current and projected ground rent payment
- Whether you can afford a premium now
- Your appetite for legal and political uncertainty
Axis Solicitors can estimate how much it may cost to extend a leasehold under today’s rules, compare this with likely future changes, and advise on timing tailored to your circumstances.
How Axis Solicitors Can Help with Leasehold Reform, Ground Rent and Freehold Rights
Axis Solicitors is an SRA-authorised firm (SRA No: 653526) with more than 20 years’ experience of handling property and litigation matters across Manchester, Birmingham and London offices.
Our core property law services include:
- Statutory and informal lease extensions
- Collective and individual freehold purchases
- Buying out or reducing ground rent
- Service charge and management disputes
- General residential conveyancing
We provide clear advice on complex statutory schemes, detailed premium estimates, negotiation with freeholders and managing agents, and representation in tribunals and higher courts where needed.
Book a Consultation with our team for tailored advice before you commit to extending, buying, or selling a leasehold property.
FAQs about Leasehold Reform Ground Rent UK Changes
When will ground rent be effectively abolished for most leaseholders?
Ground rent is already abolished for most new leasehold houses via peppercorn rent since June 2022. For existing leases, ground rent will be capped at £250 per year and then reduced to peppercorn after 40 years, but this depends on the final version of the Commonhold and Leasehold Reform Bill and secondary legislation, with implementation unlikely before late 2027.
How do I know if the Ground Rent Act 2022 applies to my lease?
Check the date and type of your lease. New long residential leases granted after 30 June 2022 (or 1 April 2023 for many retirement properties) in England and Wales usually fall under the Act. Older existing leases do not benefit from the 2022 Act’s peppercorn rules.
Does leasehold reform apply differently in England and Wales?
The core leasehold law reforms, including ground rent caps and lease extension rights, cover both England and Wales. However, there are differences in notices, forms and subordinate legislation, and Welsh Government guidance should be consulted for Wales-specific details.
What can I do if my freeholder will not engage with a lease extension or ground rent buyout?
Statutory procedures allow leaseholders to serve formal notices, rely on deemed service rules and apply to the First-tier Tribunal (or Welsh equivalent) to settle terms. Specialist solicitors can manage this new process on your behalf, and the Leasehold Advisory Service can provide general background information.
Where can I find further information on leasehold reform and ground rent changes?
For general guidance, visit the relevant GOV.UK pages, Commons Library briefings and the Leasehold Advisory Service. For tailored legal advice on your own lease, qualifying criteria and ground rent exposure, we recommend instructing Axis Solicitors. Book a consultation with us to discuss your specific position.
