For years, leasehold property has carried a quiet but significant drag on the housing market. Not necessarily because people don’t want flats, but often because leaseholders have been saddled with costs that feel arbitrary and, in some cases, aggressively escalatory.
So the government’s announcement to cap ground rents is not just welcome….it’s overdue.
Under proposals outlined by Prime Minister Keir Starmer, ground rents will be capped at £250 per year before eventually reducing to a peppercorn rate after 40 years. The reforms sit within the draft Commonhold and Leasehold Reform Bill and will affect millions of homeowners across England and Wales.
At DOMVS, we absolutely support this move. And not simply because it saves homeowners’ money, but also because it removes one of the biggest barriers to buying and selling leasehold homes. The change will provide greater liquidity in the housing market, and leasehold homes that have been hard to sell may finally become viable again.
Why Ground Rent Has Become a Problem
Ground rent, in theory, was never meant to be punitive. In practice, however, it has often become exactly that. We’ve seen leaseholders facing rising ground rents with no clear service in return, layered on top of fluctuating mortgage rates.
For buyers, this combination has understandably caused concern, but for lenders, it has been a firm red flag. Many banks have rightly refused to lend on properties with aggressive or doubling ground rent clauses. The result? Perfectly good homes becoming unmortgageable, transactions falling through, and homeowners effectively trapped.
This reform directly addresses that problem. By capping ground rents and ultimately reducing them to a nominal sum, the government is removing a key source of uncertainty. And in property, certainty matters.
What This Means in Practice
For buyers
This reform reduces one of the biggest unknowns associated with leasehold ownership. Predictable, capped ground rents make it easier to budget, easier to borrow, and easier to commit with confidence.
For sellers
Properties that previously struggled to attract interest due to ground rent terms may now appeal to a wider pool of buyers and lenders. That improves saleability and, in many cases, value.
For existing homeowners
Lower and capped ground rents mean less financial strain and greater peace of mind for existing homeowners. Removing the threat of escalating costs allows leaseholders to plan ahead with confidence, and in some cases save more than £4,000 over the course of their lease, according to government estimates.
Commonhold: A Step Toward Proper Ownership
The proposals also include a renewed push toward commonhold, giving homeowners a genuine stake in the buildings they live in and a meaningful say in how they are run. In principle, this is exactly where the system should be heading. As ever, the challenge will lie in translating policy intent into workable, widely adopted solutions. Home ownership should mean control and clarity, not confusion and fear of hidden costs.
But There’s More Work to be Done
While we welcome these changes, there is still a glaring issue that remains only partially addressed: service charges. Unscrupulous or poorly explained service charges cause many of the same problems as excessive ground rents. Lack of transparency, limited accountability and sudden increases can undermine trust just as quickly.
The government has signalled increased transparency through the Leasehold and Freehold Reform Act 2024, which is a step in the right direction. But we would like to see stronger, clearer protections that ensure service charges genuinely reflect services provided, not inflated margins or inefficiencies. True reform means clarity. Homeowners should understand exactly what they are paying for, why they are paying it, and have meaningful routes to challenge costs that feel unjustified.
Capping ground rents won’t solve every issue overnight, but it removes a long-standing distortion from the leasehold market and restores a degree of fairness that has been missing for too long. It makes homes easier to buy, easier to sell, and easier to finance, benefiting homeowners, buyers, lenders and the wider market alike. And that includes us as estate agents, who must play our role in helping people move forward with greater confidence and fewer obstacles.
Ground rents were the obvious starting point. Service charge transparency should be next.
For many leasehold homeowners, these changes may mark the right moment to review their options. If you’re considering a sale, an instant valuation can be a useful first step. Start the process here.
