Ground rents to be capped at £250 a year, as rules changed to favour of leasehold owners.

Name: Expat Mortgage
Brand: Offshoreonline
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Ground rents paid by leaseholders are to be capped at £250 a year under new legislation being introduced in England and Wales, which is expected to become law in just over two years.

Ground rent has historically been a key part of the leasehold system in England and Wales, but does not apply in Scotland and Northern Ireland, which have different systems of property ownership. Leasehold flats are typically found in cities, but also in any building from converted Victorian houses to purpose built blocks of apartments.

Often misunderstood, ground rent is the fee paid by leasehold owner for the land beneath their buildings under the terms of the lease. Each year, the amount owed to the freeholder can double or increase in line with inflation at fixed intervals, either which can make it difficult to sell or get a mortgage for a property.

In general terms, the freeholder of a property owns the building and the land beneath it outright, so leaseholders effectively only buy the right to live in the property for a fixed period of time, expressed as the length remaining on a lease.

Guy Stephenson of expat mortgage brokers Offshoreonline explained, “It is vital that house buyers, including expat buy to let investors, fully understand the leasehold system. Mortgage lenders always ask about ground rent and if a lease includes steeply rising conditions for ground rent, they may well decline to lend. Moreover, if a property is marketed at an apparently low price, check the length of the remaining lease first. If the lease only has 70 or so years to run, this is probably why the property price is lower. The buyer will be expected to foot the costs of extending a lease and whilst these can be extended, the process is often costly, complex and time consuming, which is why many mortgage lenders will not finance leasehold properties with short leases remaining. One solution is to negotiate a simultaneous lease extension at the point the purchase is completed.”

According to the BBC, there are around five million leasehold properties in England and Wales, of which 70% are flats. Government figures suggest homeowners collectively paid more than £600m in ground rent in 2025. The English Housing Survey estimates the average annual ground rent in 2023/2024 was £304 per annum.

Ground rents were abolished for most new residential leasehold properties in England and Wales in 2022, but remained for existing leasehold homes.

Ground rents to be capped at £250 a year, as rules changed to favour of leasehold owners.

Ground rents paid by leaseholders are to be capped at £250 a year under new legislation being introduced in England and Wales, which is expected to become law in just over two years.

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