Why it matters: The £250 cap could save many leaseholders over £4,000 over the course of their lease, with Ipswich MP Jack Abbott describing the reforms as bringing "real change for leaseholders in Ipswich who have been trapped in an unfair system for too long."
The big picture: Prime Minister Keir Starmer and Housing Secretary Steve Reed confirmed the cap as part of a wider package of measures to reform the leasehold system, which the Government says has "tainted the dream of home ownership for so many."
Between 770,000 and 900,000 leaseholders in England pay above £250 a year in ground rent, with last year's total exceeding £600 million. Over 380,000 leaseholders in the East of England are expected to benefit from the reforms.
The details: The Government has published the draft Commonhold and Leasehold Reform Bill, which includes the £250 ground rent cap, a ban on new leasehold flats, the abolition of forfeiture, and support for the transition to commonhold ownership.
Jack Abbott said the reforms would unlock stalled property sales, protect local homeowners from unfair charges, and mark a "decisive shift away from an outdated system."
"For too long, escalating ground rents have made it harder for Ipswich residents to sell their homes, plan for the future, or feel secure in their ownership," he said.
What they're saying: Prime Minister Keir Starmer said the cap would save leaseholders hundreds of pounds. "That's really important because the cost of living is the single most important thing across the country," he said.
Housing Secretary Steve Reed added: "If you own a flat, you can be forced to pay ground rents that can become completely unaffordable. We said we'd be on the side of leaseholders – which is why today we are capping ground rent."
Expert advice: Legal experts have warned that leaseholders should not stop paying their current ground rent despite the announcement.
Will Oakes, partner at Attwells Solicitors, said: "Even though the £250 cap has been announced, it has not yet come into force. Until the legislation is passed and commencement dates are confirmed, the existing lease terms and rate of ground rent are still legally binding, and failure to pay could put leaseholders in breach of their lease."
He added that there is an indication that if approved, the legislation will be in force by 2028. "Therefore this should be treated as a future benefit which will arise over a longer term rather than immediately," he said.
Molly Harris, senior associate at Ellisons Solicitors, said the proposals include a cap at £250 followed by a 40-year transitional period during which ground rent would reduce to a peppercorn. "Leaseholders should be mindful that no immediate savings will be seen until the legislation is in force," she said.
She advised leaseholders to avoid agreeing to lease variations relating to ground rent without first taking legal advice on how the reforms could affect them. "Those considering selling or remortgaging should also seek early legal and valuation advice, as the proposed changes may influence timing and strategy," she said.
Property market impact: Experts say the reforms could significantly improve the attractiveness of affected properties to buyers and lenders.
OpinionWhere ground rent is currently significantly higher than the proposed cap, the reforms could greatly improve the attractiveness of a flat to both buyers and lenders. From a buyer's perspective, one of the most off-putting aspects of ground rent is uncertainty. A clear cap should provide greater transparency and confidence, making affected properties easier to sell and mortgage.
Farida Rouane, an independent financial planner at Upside Finance, said the cap should improve mortgageability for affected properties. "Previously, flats with high ground rents, particularly those with escalating clauses, were often unmortgageable, severely limiting the buyer, especially buyers needing mortgages," she said. "This reform should gradually improve liquidity in the leasehold market."
Will Oakes agreed, saying the cap may have a "very positive impact" on flats with high or doubling ground rent. "Capping the ground rent should improve sale prospects as flats which previously had high ground rent will become more attractive to buyers as they will be more affordable, there will be certainty over the terms of the ground rent, and improved mortgage eligibility," he said.
Abolishing forfeiture: The reforms also aim to abolish forfeiture, which has allowed landlords to repossess properties when leaseholders fall behind on payments.
Molly Harris explained that most residential leases currently allow a freeholder to seek possession of a flat for breach of the lease, including unpaid service charges or ground rent, even where arrears are relatively small. "Forfeiture brings the lease to an end, and the freeholder is not required to account to the leaseholder for the value of the property," she said.
"Abolishing forfeiture removes the most severe enforcement tool available to freeholders. This represents a significant improvement in protection for leaseholders. However, it does not place leaseholders beyond accountability. A new statutory enforcement regime would allow courts to make remedial orders and, in serious cases, orders for sale."
Will Oakes said this provides "greater protection to the leaseholder against losing their home and reduces the imbalance of power between the freeholder and the leaseholder."
"Leaseholders will have greater confidence to challenge unreasonable rent demands and will not risk losing their home due to suffering financial hardship," he said.
Both experts noted that while the abolition of forfeiture reduces pressure, landlords can still pursue enforcement actions through the courts. Molly Harris said: "The key message remains that early engagement and professional advice are essential where arrears arise."
By the numbers: More than 15,400 homes in Ipswich could potentially benefit from the reforms, according to Molly Harris.
She said that according to the 2024 Ipswich Borough Council Housing Report, Ipswich had 61,628 dwellings at that time, with approximately 25% being flats or maisonettes.
"Ipswich is also one of the few regional towns with residential blocks meeting the 'higher-risk' definition of over 18 metres under the Building Safety Act 2022," she said. "These buildings have faced significant disruption and expense following recent legislative changes, so additional certainty around ground rent is likely to be welcomed by many leaseholders."
The other side: Experts have highlighted potential gaps and concerns about the reforms.
Will Oakes warned that the proposed legislation focuses heavily on the cap in ground rent but does not refer to service charges. "Leaseholders should be aware that freeholders may seek to increase service charges in order to offset loss of ground rent," he said.
Farida Rouane raised concerns about whether the reforms will apply retrospectively to existing leases.
OpinionMany leaseholders currently trapped in properties with onerous ground rents may not benefit if the cap only applies to new leases. There's also the question of enforcement and what recourse leaseholders have if freeholders don't comply.
Molly Harris said there has been criticism from parts of the investment sector, with concerns that the reforms could reduce the attractiveness of the UK housing market for institutional investors. "The Residential Freehold Association has warned that the ground rent cap could damage investor confidence, and investment manager M&G has estimated a £230 million reduction in profits as a result of the changes," she said.
"Whether this will have a meaningful impact on leaseholders in practice remains to be seen. What is clear is that the reforms significantly alter the balance between leaseholders and freeholders, and the long-term effects will take time to emerge."
What's next: The Moving to Commonhold consultation has opened, giving people the chance to shape the next phase of reform. The draft legislation still requires parliamentary approval before it can take effect.
The Bill seeks to overhaul the commonhold system, allowing owners to hold their flats as freehold owners while also owning a share of the building and having greater control over its management.
Molly Harris said commonhold is still relatively unfamiliar and will require adjustment across the conveyancing sector. "A commonhold transaction involves the transfer of the unit itself alongside the transfer of an ownership share in the wider block," she said. "While the intention is for the process to become more streamlined over time, there is concern that the untested nature of these transactions may lead to early practical issues."
She added that the Bill also proposes making it easier for existing leasehold blocks to convert to commonhold by lowering the threshold for agreement from unanimous consent to 50% of leaseholders. "This means commonhold may eventually extend beyond new developments," she said.
What leaseholders should prioritise: Harris said the priority for leaseholders is to remember that nothing has changed yet.
"Ground rent demands must still be paid, and forfeiture remains a risk until the law is amended," she said. "Anyone considering stopping payments, extending their lease, or making major decisions based on the proposed reforms should seek legal advice first."
Common questions she receives from leaseholders include "Can I stop paying ground rent?", "Should I extend my lease before or after the reforms?" and "Will this help me sell my flat or increase its value?"
The bottom line: While the Government's leasehold reforms promise savings and greater security for Ipswich leaseholders, experts warn that the benefits may take several years to materialise, and some loopholes could allow landlords to recoup losses through other charges.
