What is ground rent and how are leasehold rules changing?

"There are around five million leasehold properties in England and Wales, of which 70% are flats. At the moment, the freeholder of a property generally owns the building and the land beneath it, outright and forever. Leaseholders effectively buy the right to live in the property for a fixed period of time. Leasehold flats are found in all sorts of properties - from converted Victorian houses to purpose built skyscrapers - and tend to be concentrated in big cities."

"Ground rent is the fee paid by leasehold homeowners for the land beneath their buildings. It must be paid under the terms of their lease, and the amount due can double or increase in line with inflation at fixed intervals, which can make it difficult to sell or get a mortgage for a property. Ground rents were abolished for most new residential leasehold properties in England and Wales in 2022, but remained for existing leasehold homes."

"The government says approximately 3.8 million properties still attract ground rent across England and Wales, with homeowners collectively paying more than 600m in 2025. The English Housing Survey estimates the average annual ground rent in 2023/2024 was 304. As part of the government's reforms, ground rent will be capped at 250, before falling to a "peppercorn" rate - effectively zero - after 40 years. The cap could come into force in late 2028."

Draft legislation would cap ground rent at £250 and phase it to a peppercorn (effectively zero) after 40 years, potentially coming into force in late 2028. The proposals would ban the sale of new leasehold flats and increase homeowners' control over how their buildings are managed. England and Wales contain around five million leasehold properties, about 70% of which are flats. Approximately 3.8 million properties still attract ground rent, with homeowners collectively paying more than £600m in 2025. Ground rents can double or rise with inflation at fixed intervals, which can hinder sales and mortgageability.

Read at www.bbc.com