As announced recently in the press*, the UK housing market is undergoing significant changes that will affect millions of residential leaseholders in England and Wales. The government has published a draft Commonhold and Leasehold Reform Bill, which includes a cap on ground rents for existing leasehold properties at £250 per year, with plans for ground rents to reduce to a nominal ‘peppercorn’ rate over time - effectively zero.
These reforms form part of a broader effort to make homeownership fairer and reduce historic burdens on leaseholders. However, the changes also bring new legal complexities that many leaseholders may need help navigating.
What is Ground Rent?
Ground rent is a fee that a residential leaseholder pays to the freeholder - the person or company that owns the land on which the property sits. A leaseholder owns the right to occupy a property for a set number of years but does not own the land beneath it, which remains the freeholder’s.
Traditionally, ground rent was an annual obligation embedded in many lease agreements, often with provisions for it to increase over time.
Unlike service charges, ground rent is not tied to specific services such as garden maintenance or building repairs. It is simply a charge for the right to live on the land. In some older leases, ground rent can escalate significantly over time - making properties costly to own and difficult to sell or mortgage.
The draft reform aims to cap ground rents at £250 per year for existing leases and then gradually reduce that figure to a peppercorn rent (effectively zero financial cost) over a period of decades. This is expected to benefit hundreds of thousands of leaseholders who currently pay higher ground rents.
5 reasons leaseholders might need a solicitor now
1. Understanding your current lease terms
Many leaseholders have never fully understood the implications of the ground rent provisions in their leases, especially where these charges escalate or are linked to complicated formulas. A property solicitor can review your lease, explain exactly what you are currently obligated to pay and what changes the reforms might mean for you.
2. Navigating Reform implementation
Although the draft Bill sets out plans to cap ground rents, it still needs to go through Parliament and prospective implementation steps, including transitional arrangements and detailed regulations. A solicitor can help you understand how and when these changes will affect your homeownership rights.
3. Selling or remortgaging your home
Even with reforms on the horizon, ground rent terms can still affect your ability to sell or mortgage a leasehold property. Lenders may be cautious where leases contain onerous charges or unclear provisions. Solicitors can advise on how best to present your lease terms to potential buyers or lenders, and assist with negotiations if needed.
4. Lease extensions and freehold purchase
The draft reforms also propose making it easier for leaseholders to convert to commonhold or take collective ownership of the freehold if they choose. These options require detailed legal work, including valuation, negotiation and documentation - a specialist solicitor can guide you through these processes.
5. Challenging unreasonable charges
In some cases, freeholders or management companies may try to enforce inappropriate charges or fail to provide required information. Legal support helps ensure your rights are protected and that any demands for payment are legitimate and compliant with current law.
How can our Dorset solicitors help
At Coles Miller, our Residential Property and Leasehold team has experience advising leaseholders on their rights, obligations and legal options. We can assist with:
• Lease review and interpretation: making sense of complex ground rent clauses and other lease terms.
• Advice on leasehold reform impacts: helping you understand how the ground rent cap and wider legislative changes affect your situation.
• Support during sale or remortgage transactions: ensuring ground rent and lease terms do not become barriers to your property plans.
• Lease extension and commonhold conversion advice: guiding you through statutory processes and options to increase security and control over your home.
• Dispute resolution: assisting with negotiations or legal challenges where freeholders or managing agents are not acting appropriately.
Our team combines technical property law expertise with practical experience to help leaseholders make informed decisions in a the rapidly changing world of property.
Ground Rent Reform is just one part of the change.
We can make sure you stay ahead of the current legal changes, with the correct advice. The proposed ground rent cap represents a major step in addressing the long-standing issues of leasehold property ownership. But the reform process is still ongoing, and many leaseholders will benefit from professional legal advice as changes are introduced.
If you are a leaseholder with questions about ground rent, selling your property, remortgaging, extending your lease or understanding your rights under the new reforms, Coles Miller can help you protect your interests and navigate the legal complexities with confidence.
Get Expert Legal Advice
If you are a leaseholder, and seek professional advice on your properties, please contact Nick Leedham, Partner and Head of Residential Leasehold at Coles Miller Solicitors.
*Story covered at here