Quid pro quo leases and the ground rent cap

Overview

The government is legislating to cap ground rents at £250 year, changing to a peppercorn after 40 years.  In the policy paper on addressing unregulated and unaffordable ground rent (published on 27 January 2026) and Annex 5 to the draft Impact Assessment[1] for the draft Commonhold and Leasehold Reform Bill[2] (CLRB), we indicated that we are considering a narrow exemption to this policy for ‘quid pro quo’ leases – where a higher ground rent is agreed between the leaseholder and freeholder for a corresponding reduction in premium. The ground rent cap, along with the provisions in the draft CLRB, has undergone pre-legislative scrutiny by the Housing, Communities and Local Government Committee. This consultation seeks further technical feedback on whether there should be an exemption and, if so, how it should be defined and how it should work.