The government’s consultation on “quid pro quo” leases and the proposed £250 ground rent cap closes at 11:59pm on 27 August 2026. The consultation is not reconsidering the overall £250 policy. Instead, it asks whether a narrow exemption should apply where a higher ground rent was genuinely agreed in exchange for a corresponding reduction in the purchase premium.
The £250 cap itself remains subject to Parliament because it forms part of the draft Commonhold and Leasehold Reform Bill rather than legislation already in force.
Where the reform currently stands
The government announced in January 2026 that ground rents on qualifying older long residential leases would be capped at £250 a year, moving to a peppercorn after 40 years. The draft legislation principally affects leases granted before the Leasehold Reform (Ground Rent) Act 2022 restrictions took effect, subject to specified exemptions.
Around 3.8 million properties in England and Wales are estimated to have a ground rent obligation. The government estimates that approximately 770,000 to 900,000 leaseholders currently pay more than £250 annually, including 490,000 to 590,000 in London and the South. Estimated lifetime savings from the reform are between £10.0 billion and £12.7 billion, assuming implementation in 2028.
The House of Commons Library briefing on the ground rents cap provides further detail.
| Date | Development |
|---|---|
| 27 January 2026 | Draft Commonhold and Leasehold Reform Bill published |
| 13 May 2026 | Bill included in the King’s Speech programme |
| 2 July 2026 | Quid pro quo consultation opened |
| 27 August 2026 | Consultation closes at 11:59pm |
| Late 2028 | Ground rent cap could commence, subject to Parliament |
| 40 years after commencement | Capped ground rents would move to a peppercorn |
What is a quid pro quo lease?
The proposed definition draws on paragraph 26(9) of Schedule 4 to the Leasehold and Freehold Reform Act 2024. Broadly, the lease must have been granted with a lower premium and higher rent than would otherwise have applied, with the premium saving broadly equivalent to or greater than the capitalised value of the additional rent.
A high ground rent by itself would not qualify. The consultation proposes placing the burden on the freeholder to demonstrate that a genuine arrangement existed and asks whether an independent specialist should determine disputed cases.
Leaseholders should retain the original lease, purchase documentation and correspondence showing how the premium and ground rent were agreed. If a dispute reaches the tribunal, our guide to the recent Property Chamber fee changes and choosing the right court route for a civil dispute may help. Good records are also central to building a file that stands up in court.
What should freeholders know?
The consultation asks freeholders for evidence about how often these arrangements were used and what documentary proof exists. Trading Standards can impose penalties of £500 to £30,000 for certain prohibited ground-rent breaches under the 2022 Act, and the government proposes safeguards against false claims of exemption.
You can respond through the MHCLG consultation on quid pro quo leases and review the draft Commonhold and Leasehold Reform Bill.
Frequently asked questions
Is the £250 ground rent cap already law?
No. It is government policy contained in draft legislation and remains subject to parliamentary approval.
When could the cap start?
The government has indicated that, subject to Parliament, commencement could be in late 2028.
Will every lease with ground rent above £250 be exempt as quid pro quo?
No. The proposed exemption is intended to be narrow and would require evidence that a higher rent was genuinely exchanged for a corresponding reduction in premium.
Should leaseholders wait before extending a lease?
Not automatically. The proposed cap may still be years away, while lease length, saleability and current ground-rent terms may require action sooner. Take advice on the specific lease before deciding.
Leaseholders who also let their property can review our plain English timeline of the Renters’ Rights reforms, note on managing disrepair counterclaims, housing disrepair solicitors in London and landlord and tenant eviction services.
For mixed-use property, see our commercial lease solicitors in London. For inherited leasehold property, our guides to life interest trusts in wills and probate solicitors in London provide a starting point.
For advice on a specific lease, contact our solicitors in North London on 020 3581 9293 or info@atalawsolicitors.com.