Ground Rent Reform
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What you need to know about the Ground Rent Act
What began as a manifesto commitment in 2017 has evolved into concrete legal change, driven by widespread concern over onerous ground rent terms, particularly leases with ground rents doubling every 20 years or less, or escalating clauses, that have rendered some properties highly undesirable to purchase. The Leasehold Reform (Ground Rent) Act 2022 restricted ground rents on new residential long leases to peppercorn.
Since the Ground Rent Consultation in November 2023 the Government has been considering legislating on existing ground rents too, with no compensation to Freeholders. On 27th January 2026, the Government announced that ground rents on existing leases would be capped at £250 per annum for 40 years, before reducing to peppercorn. Implementation details remain to be confirmed, with 2028 proposed as the target year for capping existing ground rents.
We have had to take a much more cautious approach when carrying out ground rent valuations as there is so much uncertainty in the ground rent market, with a reasonably low level of transactions. We have introduced a material valuation uncertainty clause in some of our ground rent valuations as recommended by the Royal Institution of Chartered Surveyors (RICS).
For more insight on Ground Rents read our related articles:
"A ‘ground rent’ is a rent that is usually paid annually by the leaseholder of a long lease to the landlord, typically the Freeholder. The Leasehold Reform (Ground Rent) Act 2022 prohibits ground rents to be anything above peppercorn on all new leases (unless exempt)."
If you are interested in knowing more about Ground Rent and how it relates to valuations then please get in touch with Emily.
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