Major changes to the leasehold system in England and Wales are on the horizon, as the UK government moves to cap ground rents and overhaul how leasehold properties are owned and managed.
Under new proposals, ground rents paid by leaseholders will be capped at £250 per year, with a long-term plan to reduce them to a peppercorn (effectively zero) after 40 years. The reforms form part of a draft Leasehold and Commonhold Reform Bill, which aims to make home ownership fairer, more affordable, and less complex.
There are around five million leasehold homes in England and Wales. While ground rents were abolished for most new leasehold properties in 2022, millions of existing leaseholders remain locked into contracts that include escalating charges. Many leases contain clauses that allow ground rent to double periodically or increase in line with RPI inflation, making properties harder to sell or remortgage and adding financial strain during a cost-of-living crisis.
Campaigners had feared the government might abandon plans to cap ground rents due to concerns over the impact on pension funds. However, Labour MPs including former Housing Secretary Angela Rayner, have pushed to honour the party’s manifesto promise to tackle what they described as “unregulated and unaffordable ground rent charges”.
Prime Minister Sir Keir Starmer announced the cap publicly, stating it could save some leaseholders hundreds of pounds a year, calling it a crucial step in easing household financial pressure.
The proposed reforms go beyond ground rents. They also include:
- A ban on the sale of new leasehold flats
- The abolition of forfeiture, which currently allows leaseholders to lose their home over debts as low as £350
- Greater rights for homeowners to manage their buildings
- Simpler conversion to commonhold, where residents jointly own their building and land outright, with no expiring lease
The bill will now be scrutinised by MPs on the Housing Committee, with the government suggesting the ground rent cap could come into force as late as 2028.
While the reforms are welcome, they don’t erase existing debts. Many leaseholders already owe historic ground rent arrears, and freeholders and managing agents still have a legal right to recover legitimate outstanding balances – albeit under a system that is becoming more regulated and tenant-friendly. Navigating leasehold debt during a period of legal reform can be complex. Which is where a specialist debt collection agency can help to:
- Recover outstanding ground rent and service charge arrears fairly and compliantly
- Engage leaseholders constructively, reducing disputes and escalation
- Ensure collections align with current and upcoming legislation, avoiding reputational or legal risk
- Provide clear documentation and audit trails, which are increasingly important under tighter scrutiny
- Help maintain cash flow for freeholders and managing agents without resorting to aggressive enforcement
With forfeiture set to be abolished, the focus of debt recovery is shifting away from punitive measures and towards professional, ethical collection practices – an area where experienced agencies add real value. Working with a reputable debt collection agency can help ensure outstanding ground rents are recovered lawfully, efficiently, and with minimal conflict, allowing all parties to move forward under a fairer system. Speak to Sinclair Taylor to find out more.
