Ground Rent Cap Could Arrive a Year Early: What It Means for Flat Sellers

The government has signalled it wants to bring in the £250 cap on ground rents a year earlier than planned. For anyone selling a leasehold flat, the obvious question is whether an earlier cap changes anything about selling now. The short answer: not yet, and possibly not for a while.

Here is what has been said, what it would actually do, and how it sits against a sale in 2026 or 2027.

What Has Actually Changed

The cap itself is not new. The plan to limit ground rent on existing leases to £250 a year, falling to a peppercorn (a token amount, effectively nothing) after 40 years, was already set out in the draft Commonhold and Leasehold Reform Bill published in January 2026. What has shifted is the timing. Ministers had pointed to late 2028 for the cap taking effect; the government is now indicating late 2027, a year sooner.

The move follows pressure from Labour MPs and a report from the Housing, Communities and Local Government Committee, which urged ministers to press ahead without undue delay. The Housing Minister, Matthew Pennycook, has said most leaseholders simply want the £250 cap brought in without further hold-ups. The final Bill is expected before Parliament breaks for the summer in July 2026.

One caveat worth keeping in view: this is a stated intention, not a fixed date in law. The earlier 2028 timetable remains the fallback if the Bill slips.

Why £250 Is the Number That Matters

The figure is not arbitrary. Pennycook told the committee that £250 was chosen partly because it is a known threshold for mortgage lending: ground rents above it can make a flat harder to mortgage, which narrows the pool of buyers a seller can reach. A cap at that level is meant to keep flats inside mainstream lender criteria rather than pushing them towards cash-only sales.

The Assured Tenancy Trap

Until recently, £250 carried a second kind of weight, and it was where London worked differently. Under the Housing Act 1988, a long lease could be accidentally treated as an assured tenancy (the kind of agreement most private renters have) if the ground rent went above £250 a year outside London, or above £1,000 a year inside Greater London. The effect was serious: a leaseholder in that position who fell a few months behind on ground rent could face a mandatory possession claim that a court had no discretion to refuse. Ordinary forfeiture, by contrast, lets a court give the leaseholder a chance to put things right.

That trap has now been closed, separately from the ground rent cap. The Renters' Rights Act 2025, in force since 27 December 2025, confirms that a lease of more than 21 years cannot be an assured tenancy, whatever the ground rent. A freeholder can no longer use the assured tenancy route to repossess a long-leasehold flat over ground rent arrears, and the old £250 and £1,000 London thresholds no longer carry that risk.

What the £250 cap still tackles is the mortgage problem: lenders remain wary of ground rents above that level, so the cap is about keeping flats mortgageable rather than fixing the tenancy trap, which is already dealt with.

What It Means If You Are Selling Now

An earlier cap does not help a sale agreed this year or next. A flat sold in 2026 or 2027 runs under the rules in force today, and a high or escalating ground rent is still something a buyer and their lender will scrutinise. Waiting for the cap is really a bet on timing: on the Bill passing, on the date holding and on your own circumstances allowing a delay of a year or more.

If a ground rent clause is genuinely holding back a sale, two routes work now rather than later. A deed of variation (a formal change to the lease, agreed with the freeholder) can reduce or restructure the ground rent, though it depends on the freeholder agreeing and takes time. Or a sale to a cash buyer sidesteps the lending issue entirely, since there is no mortgage valuation to satisfy; the trade-off there is a price below open market value in exchange for speed and certainty. Our guide on how ground rent works covers the clauses lenders object to, and the cash buyer route page sets out where it fits and where it does not.

The Other Side of the Argument

The acceleration is not welcomed everywhere. Freeholders and institutional investors, including some pension funds, have long treated ground rent as steady, predictable income, and bringing the cap forward sharpens their objections. Several of the practical details are also unresolved, including any exemptions and how existing arrangements are handled in the switch. Those points will shape what the final Bill actually says, and they are worth watching as it moves through Parliament.

For now, the sensible reading for a seller is simple. Treat the cap as a likely future change rather than a present-day fix, and weigh a sale on the flat as it stands today.

This article reflects the position as of June 2026 and is general information, not legal advice. The Bill and its timetable may change as it passes through Parliament.