When will Ground Rent be Abolished (UK)

Ask most leaseholders when ground rent is being abolished and you get the same answer: “It already has been, hasn’t it?” It’s an easy mistake to make. The headlines in 2022 and again in 2024 all said ground rent was on its way out.

Here’s the part that got lost in the coverage. Ground rent has been abolished on new leases. If you’re sitting in a flat you bought in 2015, your ground rent is still legally payable, still rising on whatever schedule your lease sets out, and still capable of wrecking a sale.

So when does that change? Let’s go through what’s actually law, what’s still a promise, and what it means if you need to sell in the meantime.

The short answer: it depends which lease you’re talking about

There are really two questions hiding inside “when will ground rent be abolished”.

For leases granted from 30 June 2022 onwards, it already has been. Landlords can only charge a peppercorn rent, which in practice means nothing at all.

For leases granted before that date, it hasn’t been abolished, and no commencement date has been set for doing so. That’s the answer most people don’t want to hear, because it’s the group most people are in.

What’s already happened: the Leasehold Reform (Ground Rent) Act 2022

The Leasehold Reform (Ground Rent) Act 2022 came into force for most new long residential leases in England and Wales on 30 June 2022. It applied to new retirement properties from 1 April 2023.

The effect is simple. On a qualifying new lease, a landlord cannot demand a monetary ground rent. They can only require a peppercorn, and there are penalties for charging more.

What the Act deliberately did not do was reach backwards. Existing leases were left exactly as they were, on the basis that changing agreed contractual terms retrospectively raises harder legal questions and much louder objections from freeholders and their investors.

What the 2024 Act did, and what it didn’t

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024, just before the general election. It was widely reported as the end of leasehold problems.

It contains real improvements. It makes lease extensions and freehold purchase easier and cheaper in principle, improves service charge transparency, and bans new leasehold houses in most cases.

But on the specific question of existing ground rents, it stopped short. A government consultation had floated several options for capping ground rents on existing leases, including reducing them to a peppercorn, capping them at £250, capping them at 0.1% of the property’s value, or freezing them at their original level. None of those caps made it into the final Act.

So if you were hoping the 2024 Act killed your ground rent, it didn’t.

So when will existing ground rents be abolished?

The honest answer is that nobody can give you a date.

Government has continued to signal that leasehold reform isn’t finished, with commonhold set to become the default tenure for new flats and further legislation promised to deal with existing leaseholders. Parts of the 2024 Act also still need secondary legislation before they take effect.

What that means practically is a process measured in years, not months, with the strong possibility of legal challenge from freeholders along the way. Freehold ground rent income is treated as an investment asset, and any attempt to remove it is likely to be contested.

Why ground rent matters so much when you’re selling

This is where the theory turns into a real problem at the kitchen table.

Ground rent by itself is usually a modest annual figure. The damage is done by the escalation clause: the wording that says the rent doubles every 10, 15 or 25 years. Compounded over a long lease, a small starting figure can become an eye-watering one.

Lenders have taken notice. Many now decline to lend, or lend only on restricted terms, where ground rent is high relative to the property’s value or where it doubles too frequently. Some apply a rule of thumb around 0.1% of value.

The consequence for a seller is brutal in its simplicity. If a buyer can’t get a mortgage on your flat, your buyer pool shrinks to cash purchasers, and the sale price follows it down.

I see the aftermath of this constantly. Property Rescue takes around 100 enquiries a month from sellers whose buyer has pulled out, and leasehold issues surfacing late in the conveyancing process are one of the recurring reasons. The lease gets reviewed properly at week six, the ground rent clause raises a red flag, the lender changes its mind, and a chain that looked solid collapses.

Can you deal with ground rent yourself instead of waiting?

Yes, and for most people this is the better route than waiting for Parliament.

Extend your lease. When a flat lease is extended under the statutory process, the ground rent is reduced to a peppercorn for the whole of the extended term. That removes the problem permanently rather than hoping a future cap arrives in time.

Buy the freehold. If enough leaseholders in the block act together, collective enfranchisement lets you buy out the freeholder. Once you effectively own the freehold, ground rent stops being a live issue.

Negotiate a deed of variation. Some freeholders will agree to vary an aggressive escalation clause for a fee, particularly where they can see the clause is blocking sales. It isn’t guaranteed and it isn’t free, but it’s worth asking.

All three cost money and take time. A statutory lease extension can run to several months, which is fine if you’re staying put and awful if you’ve already accepted an offer.

What I’d do if I owned a leasehold flat right now

Start by reading your lease, or paying a solicitor to read it for you. You need three facts: the current ground rent, how and when it rises, and how many years are left on the term. Around half of the sellers who come to us can lay their hands on their title deeds straight away, and the ones who can get an accurate answer on price far faster, because there’s no guesswork about what we’re buying.

Then be honest about your timescale.

If you’re not under pressure and you can absorb a few months of professional fees, extending the lease is usually the right answer. You end up with a cleaner asset, a bigger buyer pool and no ground rent. You’ll normally be able to sell for a higher price too when there’s no ground rent.

Another key change in the reform pipeline: once the lease-extension provisions of the 2024 Act come into force, you’ll have a statutory right to extend your lease to 990 years even if your current lease has far less left to run, with ground rent reduced to a peppercorn. A lease that long is something buyers, and their lenders, love to see.

If you are under pressure, and need to sell ASAP, whether that’s a chain that has already collapsed, a repossession date, a divorce settlement or a probate property draining money every month, then waiting is the expensive option.

That’s the situation we exist for.

Frequently asked questions

Has ground rent been abolished in the UK?

Only on most new long residential leases in England and Wales granted from 30 June 2022, where it is limited to a peppercorn. Existing leases are unaffected and ground rent remains payable on them.

Does the Leasehold and Freehold Reform Act 2024 cap my ground rent?

No. Proposals to cap ground rent on existing leases were consulted on but were not included in the final Act.

Can I stop paying my ground rent while I wait for reform?

No. Ground rent set out in your lease remains a legal obligation until it is varied, extinguished or changed by legislation. Non-payment can put you in breach of your lease.

Will a doubling ground rent stop me selling?

It can. Aggressive escalation clauses cause problems with mortgage lenders, which narrows your market to cash buyers and can slow or collapse a sale.

Does extending my lease get rid of ground rent?

A statutory lease extension reduces the ground rent to a peppercorn for the extended term. It’s the most reliable route currently available to leaseholders.

The bottom line

Ground rent has been abolished for people buying brand new leases. For everyone else, it’s a promise with no date attached, and promises don’t satisfy mortgage underwriters.

If you have time, use it: extend the lease, or look at buying the freehold with your neighbours, and turn your flat into something a lender is comfortable with. That’s the strongest long-term position, and it’s the advice I give more often than people expect from a cash buyer.

If you don’t have time, don’t sit and hope the law catches up with your deadline. There is a route that doesn’t depend on a lender’s view of your ground rent clause.