Speed up £250 cap on leasehold ground rent, MPs urge

A significant story is unfolding on the international scene. Speed up £250 cap on leasehold ground rent, MPs urge14 minutes ago Share Save Add as preferred on GoogleBecky MortonPolitical reporterGetty ImagesA planned £250 cap on yearly ground rents paid by leaseholders in England and Wales should be introduced more quickly, a committee of MPs has urged. The government has said it expects the limit on ground rents - an annual fee paid by leaseholders to their freeholder - to come into force in late 2028. However, a report by the cross-party Housing, Communities and Local Government Committee said this should be brought forward to late 2027, arguing leaseholders have waited too long for successive governments to tackle the issue.

The government said it was bringing forward legislation "as an urgent priority" to bring the leasehold system to an end in this Parliament - which could run until 2029. There are around five million leasehold homes in England and Wales, where people own the right to occupy a property via a lease for a limited number of years from a freeholder. As well as capping ground rents, the government's draft Commonhold and Leasehold Reform Bill, which is being scrutinised by the committee before it is introduced to Parliament, would ban the sale of new leasehold flats.

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It also aims to make it easier for people to convert to commonhold, where people jointly own and take responsibility for their buildings without an expiring lease. What is ground rent and how are leasehold rules changing? Charged £720 to have a key cut - soaring bills drive leaseholders to breaking pointGround rents are paid for the right to occupy the land on which a building sits and are separate to service charges, which cover the management and maintenance of a building.

The English Housing Survey estimated that in 2023/24 the average annual ground rent was £304 a year. However, it is common for ground rents to double or increase by RPI 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 under the previous Conservative government, but remained for existing leasehold homes.

Under the current draft version of the bill, the £250 cap would come into effect on a date decided by ministers. The government has said it expects this to be in late 2028, but it could happen sooner if the bill progresses more quickly. Instead, the committee wants the cap to come into force two months after the bill passes into law, which it said could be in late 2027.

'Realistic' 40-year timelineThe government is also promising to reduce ground rents to a peppercorn rate - effectively zero - after 40 years. The committee said it was unclear why this transition period could not be shortened to 20 years. Some freeholders and investors have argued they need more time to adjust and plan for the change.

The story has become one of the most prominent items on the global agenda.