Ground rents are being capped at £250 a year, but the change is not immediate and it does not automatically fix mortgage issues for leaseholders. This guide explains what ground rent is, what the new cap actually means, when it comes into force, and how lenders assess leasehold properties today. Written to help buyers and existing leaseholders avoid costly mistakes when selling, buying, or remortgaging a leasehold home.
Feb 2, 2026
In January 2026, the government confirmed plans to cap ground rents on existing leasehold properties at £250 per year, with a long-term aim of reducing them to a peppercorn, effectively £0.
For many leaseholders, this could be the difference between being stuck and being able to sell, remortgage, or move on.
But while the headline sounds simple, the reality is more nuanced, especially when it comes to mortgage approvals.
This guide explains what ground rent is, what’s changing, when it applies, and how it affects your ability to get a mortgage.
Ground rent is a fee paid by a leaseholder to the freeholder for the right to occupy the land the property sits on.
Key points:
These escalation clauses are where problems usually start.
From a lender’s perspective, high or rising ground rent is a red flag.
Many lenders will:
This has left thousands of homeowners unable to:
The proposed reforms introduce three major changes:
If your ground rent is higher than £250, it will be reduced to that level once the law comes into force.
Over time, ground rent will fall to a nominal amount, effectively £0.
Leaseholders will find it easier to move away from leasehold ownership entirely if the majority agree.
This is the part many people miss.
That means if you are buying or remortgaging now, the existing ground rent still matters.
Eventually, yes.
But right now, lenders are still cautious.
What lenders care about today:
Some lenders may take a more flexible view knowing reforms are coming. Others will not.
This is where many buyers get caught out.
We regularly see clients trip up because they:
Once a mortgage is declined, it can slow everything down.
This is exactly where proper advice matters.
At Mortgage Brokers Near Me, we:
For leasehold properties, mortgage approval is often about detail, not affordability.
If you already own a leasehold property:
If you’re buying:
The £250 ground rent cap is a positive step, but it’s not a magic fix overnight.
Until the law changes, lenders still judge properties based on today’s lease terms, not future promises.
Understanding that difference can save you months of stress and thousands in wasted costs.
If you’re unsure whether a leasehold property will be mortgage-friendly, it’s far better to find out before you commit.
Ground rents are being capped at £250 a year, but the change is not immediate and it does not automatically fix mortgage issues for leaseholders. This guide explains what ground rent is, what the new cap actually means, when it comes into force, and how lenders assess leasehold properties today. Written to help buyers and existing leaseholders avoid costly mistakes when selling, buying, or remortgaging a leasehold home.
Read Article
The Right to Buy discount can sometimes be used instead of a cash deposit, but it isn’t automatic. Lenders treat the discount as equity, not savings, and will still assess affordability, credit history, property type, and risk. Most Right to Buy declines happen because the case is placed with the wrong lender or key details are misunderstood, not because the scheme itself doesn’t work.
Read Article
Buying a flat? Learn why lease length, ground rent and service charges are crucial, how they affect mortgages and resale, and how Mortgage Brokers Near Me can help you buy with confidence.
Read ArticleIf you’re buying, moving, or remortgaging, speak with a MBNM adviser and get clear guidance on what’s realistically available to you, before you commit to anything.
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
Mortgage Brokers Near Me LTD is an Appointed Representative of The Right Mortgage LTD which is authorised and regulated by the Financial Conduct Authority.
The guidance and/or information contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK. The Financial Conduct Authority does not regulate Will Writing and some forms of Trusts and Buy to Lets. A fee may be charged for mortgage advice. The exact amount will depend on your circumstances.
Mortgage Brokers Near Me LTD are registered in England and Wales with company number 15189091.
C/O The Financial Management Centre, Meads Business Centre, 19 Kingsmead, Farnborough, England, GU14 7SR
