Prime minister Sir Keir Starmer has confirmed today (27 January) that ground rents will be capped at £250 a year, as the government unveiled the draft Commonhold and Leasehold Reform Bill (CLRB).

Making the announcement on social media platform TikTok, Starmer said the cap would save families hundreds of pounds a year, with many saving “over £4,000 over the course of their lease”.

The CLRB will ban new leasehold flats in a bid to strengthen home ownership, which will apply to the purchase of residential homes, although there will be some “limited exemptions” where leasehold may still be allowed.

The government claimed the bill would provide more than five million leaseholders and future homeowners with “stronger control, powers and protections”.

Forfeiture, where leaseholders can lose their homes and the equity built up by defaulting on a debt as low as £350, will also be abolished and a new enforcement regime will be established.

The government aims to implement these proposals, including the rent cap, by 2028.

“Good news for homeowners: we’re capping ground rent at £250,” Starmer said. “That means if you are a leaseholder and your ground rent is more than £250, you’ll be paying less. I’ve spoken to so many people who say this will make a difference to them of hundreds of pounds.

“That’s really important, because the cost of living is the single most important thing across the country. So, this is a promise that we said we’d deliver and I’m really pleased that we’re delivering on that promise.”

Housing secretary Steve Reed added: “If you own a flat you can be forced to pay ground rents that can become completely unaffordable. We said we’d be on the side of leaseholders, which is why today we are capping ground rent, helping millions of leaseholders by saving them money and giving them control over their home.

“The leasehold system has tainted the dream of home ownership for so many. We are taking action where others have failed, strengthening home ownership and calling time on leasehold for good.”

The government will also set out a new commonhold model to make it easier for existing leaseholders to transition to that tenure.

A consultation has also been launched today seeking views on the details of the leasehold ban.

The previous Conservative government pledged to end the “feudal” leasehold system, with the Leasehold and Freehold Reform Act becoming law in 2024 during the wash-up period in May after then prime minister Rishi Sunak called an election.

But the law quickly came under fire from the industry for being rushed and “unfit for purpose”. Housing minister Matthew Pennycook pledged to further reform the system later that year.