Ground rents for leaseholders will be capped at £250 per year, the Prime Minister has confirmed today.

In a video posted to TikTok, Keir Starmer revealed the government would be pushing ahead with its pledge to cap ground rents for leaseholders, following rumours of a potential u-turn.

The government’s official news release also reveals that ground rents will ultimately be reduced to a peppercorn over the next 40 years, meaning leaseholders will pay a nominal sum.

In the clip, Starmer says: “Good news for homeowners, we’re capping ground rent at £250. 

“So that means if you’re a leaseholder and your ground rent is more than £250, you’ll be paying less. 

“And I’ve spoken to so many people who say this will make a difference to them of hundreds of pounds, and of course, that’s really important, because the cost of living is the single most important thing across the country. 

“So this is a promise that we said we’d deliver, and I’m really pleased we’re delivering on that promise.”

NLC co-founder Katie Kendrick says: “We have campaigned for peppercorn ground rents and an end to this abusive system for years.

“While today’s announcement on ground rents falls short of immediate peppercorn ground rents, this bill as a whole is another step forward in dismantling the leasehold system in England and Wales.”

Co-founder Jo Darbyshire adds: “The £250 cap will make a difference.

“This is particularly the case for people who bought new-build properties in the last 20 years with punitive ground rents.

“And let’s remember that ground rent is a charge for no service. It’s money for nothing.

“It’s also encouraging that the government recognises that monetary ground rents must end.

“However, 40 years is an incredibly long time to wait for peppercorn ground rents.”

The NLC says that while the banning of ground rents is likely to dominate headlines, other reforms in the draft bill should not be overlooked.

These include the abolition of forfeiture and consultation on banning new leasehold flats.

Leaseholder Action is a group action taking on freeholders and insurance brokers for sharing secret commissions that it claims have increased thousands of leaseholders’ insurance charges by up to 60 per cent.

Liam Spender, the lawyer behind the claim, who successfully challenged his own freeholder, says: “The £250 ground rent cap sounds the death knell for leasehold in England and Wales.

“Some will no doubt be disappointed that ground rents are not being eliminated immediately and are instead being phased out over 40 years.

“However, crucially the cap will make it cheaper for people to buy the freehold and to extend their leases, both of which are priced by reference to ground rent values.

“Ending ever increasing ground rents should also make flats easier to sell and mortgage because there is often a need to vary ground rent terms simply to get transactions over the line.

“Also welcome is the government’s promise to abolish forfeiture, which is the right of a freeholder to take back a flat with no compensation if as little as £350 goes unpaid.

“The government has set out an ambitious programme of wider reform, including stronger protections in relation to service charges.

“This includes ending the grotesque ability of landlords to charge their legal costs to leaseholders who dare to challenge them.

“Having delayed its announcement on ground rent, the government must now urgently deliver on its promises across leasehold, including ending the creation of new leasehold flats and enabling people to take real control of their homes through commonhold.”