Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

Government to Introduce £250 Ground Rent Cap a Year Early

The government will introduce a £250 annual cap on residential ground rents in England and Wales by late 2027, a year earlier than previously planned. The change follows pressure from Labour MPs and recommendations from the Housing, Communities and Local Government Committee.

More than four million leaseholders are expected to benefit from the earlier implementation of the cap. The government had initially indicated the cap would come into effect by late 2028, but is now expected to commit to a late-2027 date, according to The Times.

The move comes after calls to speed up the reforms, with the Housing, Communities and Local Government Committee urging ministers to avoid further delays. The committee questioned the need for additional postponements while a small number of possible exemptions were still under consideration.

Under the proposals in the forthcoming Commonhold and Leasehold Reform Bill, ground rents will be capped at £250 per year before reducing to a peppercorn rate after 40 years. Ministers are expected to reject calls to shorten the 40-year transition period, citing concerns about potential legal challenges from freeholders.

The draft Bill was published in January, and the final legislation is expected to be introduced before Parliament’s summer recess in July. According to a spokesperson for the Ministry of Housing, Communities and Local Government, the reforms are expected to save leaseholders thousands of pounds over the course of their leases.

The earlier introduction of the ground rent cap is relevant for letting agents and inventory clerks managing leasehold properties, as it will affect ground rent liabilities and leasehold management practices.