Labour Considers Exemptions to Ground Rent Cap

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Labour Considers Exemptions to Ground Rent Cap

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The UK government is currently consulting on a potential exemption to its proposed £250 annual cap on ground rents for certain residential leasehold properties in England and Wales. This cap, announced in January 2026, is intended to eventually reduce ground rents to a “peppercorn” (effectively zero) after 40 years. The consultation, launched in July 2026, specifically addresses “quid pro quo” leases.

“Quid pro quo” leases are arrangements where a leaseholder agrees to pay a higher ground rent in exchange for a lower initial purchase price or a cheaper lease extension. The government acknowledges these cases are rare but is seeking feedback on whether such leases should be exempt from the cap and, if so, how to define and implement this exemption. The consultation is set to close on August 27, 2026.

The broader ground rent cap policy aims to address concerns about escalating ground rents, which have made it difficult for some leaseholders to sell their homes or secure mortgages. The Leasehold Reform (Ground Rent) Act 2022 already abolished ground rents for most new residential leasehold properties granted after June 30, 2022. The current proposals, including the £250 cap, primarily target existing leases granted before this date.

However, the potential “quid pro quo” exemption has drawn criticism from leasehold campaigners, who warn it could create loopholes for freeholders to exploit and lead to ongoing disputes. They argue that unscrupulous freeholders might assert leases are “quid pro quo” to bypass the cap, potentially

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