THE PROPERTY FILTER TAKE
The government is considering bringing the £250 ground rent cap forward to late 2027, one year earlier than the previously indicated late 2028 timeline, following pressure from Labour MPs and the Housing Committee's May 2026 scrutiny report.
Leasehold investors and freeholders holding portfolios with ground rents above £250 per year face a sharper-than-expected reduction in income - between 770,000 and 900,000 leaseholders currently pay above that threshold, concentrated in London and the South.
The timeline is TBC, but you may wish to review your leasehold portfolio now and speak to a solicitor about how the proposed £250 cap would affect your ground rent income across each asset.
The government is considering bringing the ground rent cap (a legislative limit on the annual charge leaseholders pay to the freeholder) forward to late 2027, a year ahead of schedule. According to Property Week (10 June 2026), the prime minister is weighing up the accelerated timetable amid growing pressure from Labour MPs and recommendations from the parliamentary Housing Committee.
What Does the Cap Actually Say?
Under the draft Commonhold and Leasehold Reform Bill - published in January 2026 and confirmed in the King's Speech on 13 May 2026 - ground rents on existing residential leases in England and Wales would be capped at £250 per year. After 40 years, rent would fall further to a peppercorn rate (effectively zero). The original government indication was that the cap would take effect in "late 2028" (House of Commons Library, 2026).
The cap applies only where ground rent currently exceeds £250. Rents below that figure continue unchanged. No freeholder compensation is payable for income lost above the cap - the government's policy statement states explicitly that landlords will not be required to compensate leaseholders for past ground rent paid above the threshold (government policy statement, January 2026).
If you own leasehold properties or hold freehold interests, you may wish to use our lease extension calculator to model how the cap interacts with your current ground rent income and any planned lease extension strategy.
Who Is Affected - and by How Much?
The government's own impact assessment estimates that between 770,000 and 900,000 leaseholders currently pay ground rent above £250 per year, of whom between 490,000 and 590,000 are in London and the South (government policy statement, January 2026). Across all affected properties, leaseholders are projected to save between £10 billion and £12.7 billion over the full lifetime of leases - assessed on the basis of the cap commencing in 2028 (government impact assessment, 2026).
Bringing commencement forward to late 2027 would accelerate those savings - and the corresponding income reduction for freeholders - by roughly 12 months.
For context on how the bill fits into the wider history of tenure reform, the free resources hub covers the key stages of leasehold legislation since the Leasehold Reform (Ground Rent) Act 2022, which already banned ground rents on new leases.
What the Parliamentary Committee Said
The Housing, Communities and Local Government Committee published its pre-legislative scrutiny report on 27 May 2026. It found the draft bill is "a significant step towards giving leaseholders greater control of their buildings" but urged the government to commence the £250 cap in late 2027 rather than 2028 (Housing Committee, May 2026). The committee also recommended that ministers consider shortening the 40-year transition to peppercorn - possibly to 20 years - though the government is reported to have concerns that a shorter period increases legal challenge risk from freeholders.
Housing Minister Matthew Pennycook had previously told MPs there were "a number of remaining policy choices" to work through before the cap could be introduced (PropertyWire, June 2026). An amended bill is expected to be introduced to Parliament in Autumn 2026, with Royal Assent targeted for mid-2027.
The timeline is TBC. That said, consider reviewing your property investment strategy in light of the direction of travel. The committee's recommendation carries real weight, and the political pressure to accelerate is clear.
Key Takeaways
The ground rent cap is proposed at £250 per year per lease - affecting between 770,000 and 900,000 leaseholders in England and Wales.
The previously indicated commencement date was late 2028; the government is now considering late 2027 following the Housing Committee's May 2026 report.
Freeholders will receive no compensation for ground rent income lost above the cap - confirmed in the government's own policy statement.
The Commonhold and Leasehold Reform Bill is expected to reach Parliament in Autumn 2026, with Royal Assent targeted for mid-2027; the timeline for the cap specifically remains TBC.
The government is considering bringing the ground rent cap (a legislative limit on the annual charge leaseholders pay to the freeholder) forward to late 2027, a year ahead of schedule. According to Property Week (10 June 2026), the prime minister is weighing up the accelerated timetable amid growing pressure from Labour MPs and recommendations from the parliamentary Housing Committee.
What Does the Cap Actually Say?
Under the draft Commonhold and Leasehold Reform Bill - published in January 2026 and confirmed in the King's Speech on 13 May 2026 - ground rents on existing residential leases in England and Wales would be capped at £250 per year. After 40 years, rent would fall further to a peppercorn rate (effectively zero). The original government indication was that the cap would take effect in "late 2028" (House of Commons Library, 2026).
The cap applies only where ground rent currently exceeds £250. Rents below that figure continue unchanged. No freeholder compensation is payable for income lost above the cap - the government's policy statement states explicitly that landlords will not be required to compensate leaseholders for past ground rent paid above the threshold (government policy statement, January 2026).
If you own leasehold properties or hold freehold interests, you may wish to use our lease extension calculator to model how the cap interacts with your current ground rent income and any planned lease extension strategy.
Who Is Affected - and by How Much?
The government's own impact assessment estimates that between 770,000 and 900,000 leaseholders currently pay ground rent above £250 per year, of whom between 490,000 and 590,000 are in London and the South (government policy statement, January 2026). Across all affected properties, leaseholders are projected to save between £10 billion and £12.7 billion over the full lifetime of leases - assessed on the basis of the cap commencing in 2028 (government impact assessment, 2026).
Bringing commencement forward to late 2027 would accelerate those savings - and the corresponding income reduction for freeholders - by roughly 12 months.
For context on how the bill fits into the wider history of tenure reform, the free resources hub covers the key stages of leasehold legislation since the Leasehold Reform (Ground Rent) Act 2022, which already banned ground rents on new leases.
What the Parliamentary Committee Said
The Housing, Communities and Local Government Committee published its pre-legislative scrutiny report on 27 May 2026. It found the draft bill is "a significant step towards giving leaseholders greater control of their buildings" but urged the government to commence the £250 cap in late 2027 rather than 2028 (Housing Committee, May 2026). The committee also recommended that ministers consider shortening the 40-year transition to peppercorn - possibly to 20 years - though the government is reported to have concerns that a shorter period increases legal challenge risk from freeholders.
Housing Minister Matthew Pennycook had previously told MPs there were "a number of remaining policy choices" to work through before the cap could be introduced (PropertyWire, June 2026). An amended bill is expected to be introduced to Parliament in Autumn 2026, with Royal Assent targeted for mid-2027.
The timeline is TBC. That said, consider reviewing your property investment strategy in light of the direction of travel. The committee's recommendation carries real weight, and the political pressure to accelerate is clear.
Key Takeaways
The ground rent cap is proposed at £250 per year per lease - affecting between 770,000 and 900,000 leaseholders in England and Wales.
The previously indicated commencement date was late 2028; the government is now considering late 2027 following the Housing Committee's May 2026 report.
Freeholders will receive no compensation for ground rent income lost above the cap - confirmed in the government's own policy statement.
The Commonhold and Leasehold Reform Bill is expected to reach Parliament in Autumn 2026, with Royal Assent targeted for mid-2027; the timeline for the cap specifically remains TBC.
Frequently asked questions
Frequently asked questions
Does the £250 ground rent cap apply to my existing lease?
Will freeholders receive any compensation when their ground rent income is capped?
What happens after 40 years under the current proposal?
How do I work out what this means for my leasehold property?
