Leasehold reforms: ground rents and forfeiture

A draft Leasehold and Commonhold Reform Bill has been announced, indicating major changes to the leasehold system in the UK. 

These proposed reforms include capping ground rent at £250 a year. Ground rent is an annual fee payable by the tenant to their landlord for the right to occupy the land the property is built upon. The ultimate goal under the reforms is to bring ground rent to a peppercorn (effectively, a zero rate) within 40 years, which builds on the 2022 reforms removing ground rent from most new leaseholds.

Another proposed reform is the abolition of forfeiture on small debts, which currently can result in loss of a tenant’s home and equity if they default on a debt as low as £350.

The bill also provides for leaseholders for flats to convert to commonholds more easily. Unlike a leasehold, a commonhold allows you to jointly own the property forever in a collective alongside other flat owners. This means each flat owner will have shared ownership of the communal areas of the property, which will be managed through a commonhold association.

These reforms have been suggested to come into force in late 2028 and will likely mark widespread change in the UK leasehold system, aiming to bring costs down and make home ownership more accessible. 

If you need further advice or guidance with regards to the new Leasehold and Commonhold Reform Bill, contact our disputes team on disputes@moore-tibbits.co.uk or call 01926 491181.