Ground rent
Future changes to leasehold law and ground rent
The government is making changes to leasehold law that are expected to affect ground rent in the future.
Ground rent has already ended for most new leases from June 2022 (or April 2023 for retirement properties), but this does not affect existing leases.
Leasehold and Freehold Reform Act 2024
Cost of lease extensions
The Leasehold and Freehold Reform Act 2024 is expected to make it cheaper and easier for leaseholders with high or increasing ground rents to get a lease extension through the formal route, which reduces the ground rent to zero.
The changes will cap the amount of ground rent that’s taken into account when working out the cost of a lease extension, at either 0.1% of the freehold value of the property, or the annual rent (and any increases) if this is lower. (The freehold value is the full market value of the property if it was owned on a freehold basis.)
Example: if your property has a freehold value of £200,000 and the ground rent is £500 a year, under the proposed rules the cost of your lease extension would be calculated as if the ground rent was only £200 a year (0.1%).
Buying out ground rent
The Act also introduces a new right for leaseholders who have 150 years or more left on their lease to pay an amount to reduce the ground rent to zero, without the need to extend their lease. The 0.1% cap would also apply to this option in most cases. Even if you have a long time left on your lease, it might be worth considering extending your lease at the same time.
Timing of the changes
The changes in the Act are being introduced gradually. The changes affecting ground rent have not been introduced yet, and it’s not yet known when this will happen.
The full details of how the cost of a lease extension will be calculated are not yet known. The government will consult on the changes before they're introduced.
Commonhold and Leasehold Reform Bill: ground rent cap
The government has said it will introduce new legislation to cap ground rents for existing leases at £250 a year, changing to a peppercorn (zero) ground rent after 40 years.
The draft Commonhold and Leasehold Reform Bill was published in January 2026. It will need to be approved by Parliament and will take time to be finalised. It's not yet known when the ground rent cap will be introduced.
Should you wait to extend your lease?
If you’re considering extending your lease to reduce a high or increasing ground rent, it could be better to wait for changes in the law if you do not need to extend urgently.
What’s best for you will depend on your personal circumstances. We recommend you get advice from a solicitor.
You can also use our lease length checker to check the length of your lease and get information about whether you should consider extending based on your lease length.
- Last updated:
- 27 January 2026
- Next review:
- 27 January 2028
Related content
An introduction to things you need to know if you buy a leasehold property
Advice guideHow to extend your lease, including the different routes and valuation