In brief
The draft Commonhold and Leasehold Reform Bill (the "Bill"), published at the end of January 2026, represents the Government's continued effort to deliver what it describes as a "major shake-up of the outdated leasehold system". Among its provisions are the proposed cap on ground rents in existing long residential leases and the abolition of forfeiture as a remedy available to residential landlords. These two measures would fundamentally alter the legal and commercial landscape for both landlords and leaseholders across England and Wales. Yet, as this article considers, a blanket approach risks creating as many problems as it solves. The justification for intervention is strongest where ground rents have become genuinely onerous and where leaseholders lacked the bargaining power or the advice to protect themselves. It is considerably weaker where sophisticated parties, with full legal representation, negotiated and accepted ground rent arrangements as part of a high-value transaction. A policy that treats these two situations identically is neither proportionate, nor fair.
The ground rent landscape: A tale of two markets
The average leaseholder: the case that demands reform
The leaseholders most affected by onerous ground rent arrangements are, overwhelmingly, those who purchased new-build properties - predominantly flats - from volume housebuilders in the mid-2000s to mid-2010s. These purchasers were typically offered leases on standard, non-negotiable terms which included ground rent clauses that doubled every ten or fifteen years or were linked to the Retail Prices Index. Many received inadequate legal advice about the long-term consequences of such provisions. An onerous ground rent is understood by the Government to be 0.1% or more of a property’s value.
The consequences for this group have been severe and well-documented. Ground rents that began at £200 or £300 per annum have escalated, or are contractually scheduled to escalate, to sums that mortgage lenders regard as unacceptable, rendering properties effectively unsellable. Leaseholders have found themselves trapped: unable to sell; unable to remortgage; and facing an ever-increasing financial burden which was not properly explained to them at the point of purchase.
It is for this group that the case for robust, retrospective reform is most persuasive.
Prime and ultra prime central London: a different market altogether
At the other end of the spectrum sits a market that bears almost no resemblance to the new-build leasehold scandal. In prime and ultra-prime central London (Mayfair, Belgravia, Knightsbridge, Chelsea, St John's Wood), long leasehold is the dominant form of tenure for high-value residential property, and the dynamics of those transactions are fundamentally different.
Purchasers of leasehold flats in these locations are, in the great majority of cases, sophisticated parties. They are advised by specialist solicitors, often with considerable experience of the prime central London market. Ground rents in these developments are frequently set at levels that reflect the genuine premium nature of the asset - rents of £1,000, £2,000, £5,000 per annum or more are not uncommon and, given the underlying property value, do not fall within the Government's definition of an onerous ground rent. The purchaser has the means and the professional support to understand what they are agreeing to.
For an ultra-high-net-worth individual purchasing a £10 million flat in a Mayfair mansion block, a ground rent of £5,000 per annum (being 0.05% of the property value) is, in relative terms, an entirely manageable and foreseeable cost. It was factored into the purchase price. It was disclosed, advised upon, and accepted. The landlord has structured its income around that arrangement, and other occupants and stakeholders within the same building may depend on the stability of the management framework it supports.
To subject that arrangement to the same retrospective cap as a doubling ground rent imposed without negotiation on a first-time buyer of a new-build flat is to conflate two entirely different situations. Quite simply, the policy justification for the draft Bill of protecting the vulnerable consumer does not apply with the same force, if at all, in the prime and ultra-prime central London context.
The landlord's perspective
Freehold property is often held by parties who are investing on behalf of beneficiaries (e.g. pension funds) and they have a duty to protect the value of their investment.
Those investments will have been calculated based on the contractual provisions of the lease to generate a certain income over time. With no proposed compensation for the loss of ground rent income, the proposed ground rent cap will significantly reduce the funds' income projections and the value of the asset and, ultimately, the pension pots of ordinary pension holders.
In contrast, in the case of prime and ultra-prime central London leaseholds, a ground rent cap of £250 per annum, which ends after 40 years, would result in a substantial transfer of wealth from ordinary pension holders to some of the wealthiest property owners in the world.
The draft Bill, whilst seeking to correct the historic injustice of onerous ground rents, will have the effect of creating a further injustice by depriving ordinary pension holders of funds which had been planned on the lifetime income of the asset.
A different approach - one size does not fit all
The Government's current drafting proceeds on the assumption that all ground rents in existing residential leases are broadly comparable and that a single cap of £250 per annum is the appropriate universal remedy. That assumption does not withstand scrutiny.
The harm the draft Bill targets is real and significant, but it is concentrated in a specific area of the market: volume new-build leasehold, where imbalances of information and power allowed developers and landlords to impose terms that many leaseholders did not understand and could not have been expected to resist. The draft Bill should address that harm, but should not sweep up arrangements that do not suffer from the same issues.
A more proportionate framework might draw distinctions on the following criteria:
- The level of the ground rent relative to the property's value. A rent that represents a tiny fraction of a prime asset's capital value presents no meaningful hardship and retains consumer protection.
- The presence or absence of escalation clauses. A fixed, historic ground rent, however nominally high in absolute terms, is fundamentally different from one which doubles every decade. The latter is the source of the most acute harm and should be the primary focus of reform.
Conclusion: proportionate reform for a diverse market
The draft Bill addresses real and serious harms. The case for decisive intervention in the market for volume new-build leasehold, where ordinary homeowners were systematically disadvantaged by terms they could not negotiate and did not fully understand, is compelling and well-evidenced. That case should be made loudly and acted upon firmly.
But the prime and ultra-prime central London leasehold market is a different world. Ultra-high-net-worth leaseholders who accepted substantial ground rents, which were proportionate to the value of the property, as part of carefully advised, high-value transactions do not need and should not automatically receive the same statutory concessions as a first-time buyer trapped in an escalating, often doubling, rent.
A well-crafted bill would recognise this distinction explicitly, targeting the heaviest restrictions at the arrangements that have caused the most harm, whilst adopting a more measured approach where the circumstances simply do not justify blanket retrospective intervention. The responses to the previous Government's consultation on the ground rent cap in the Leasehold Reform (Ground Rent) Act 2022 have recently been published. They reveal a disparity of views. Most respondents favoured a cap of £1–100, but some argued for higher caps in higher-value areas such as London; those selecting £401–500 specifically referenced London ground rents as part of a "compromise" rationale. What is clear is that one size does not fit all. Consideration should be given to whether the Bill could be amended to reflect that feedback, acknowledge the wide differences across the market, and deliver a reform that is both equitable and proportionate.