The Leasehold and Freehold Reform Act 2024 continues its phased commencement. From 1 February 2027, the provisions limiting ground rent for existing long residential leases take effect. Under these provisions, ground rent on most existing residential leases — including leases that pre-date the Leasehold Reform (Ground Rent) Act 2022, which only banned ground rent for new leases — is capped at a nominal annual amount of £10 per year (described in the Act as a "peppercorn" equivalent).
Who is affected: Leaseholders whose current lease requires them to pay ground rent of more than £10 per year will, from 1 February 2027, only be obliged to pay the capped amount. Freeholders cannot charge more than £10 per year as ground rent. Any lease clause requiring payment above that amount is void and unenforceable from the commencement date.
Escalating ground rent clauses: Some existing leases contain "doubling" or RPI-linked ground rent clauses that have caused significant problems with mortgage lenders and resaleability. These clauses are caught by the cap — the rent cannot exceed £10 per year regardless of any contractual escalation mechanism.
Freeholder obligations: Freeholders must reissue ground rent demands to reflect the capped amount from 1 February 2027. Issuing a demand for more than £10 is an offence. Leaseholders who have been paying escalated ground rent should check their lease and, if the new cap applies, pay only the capped amount from the commencement date.
For related guidance, see the leasehold service charges guide and the leasehold enfranchisement commencement news item. The Leasehold Advisory Service (LEASE) provides free guidance for leaseholders on how the reforms affect their specific lease.