Buy-to-let landlords could receive an unexpected £8.7 billion windfall from the government’s planned ground rent cap, according to new analysis that suggests the policy may benefit property investors as much as owner-occupiers.
Research by consultancy firm WPI Strategy finds that a substantial share of leasehold properties are already owned by private landlords, meaning the financial benefits of capping ground rents at £250 per year will flow to investors rather than solely to homeowners living in their properties.
Investment impact and economic warnings
Martin Beck, Chief Economist at WPI Strategy, said: “While the intention of reform is to support leaseholders, the economic reality of a £250 cap is that much of the financial benefit will accrue to buy-to-let landlords rather than owner-occupiers.”
He added: “Our analysis suggests the policy could deliver around £8.7 billion in windfall gains to property investors, including foreign investors, because a large share of leasehold homes are already privately rented.”
The government announced plans to overhaul the leasehold system in England and Wales in January, with the ground rent cap intended to protect more than five million leaseholders from excessive charges. The WPI report warns the changes could have broader economic consequences, estimating that reducing ground rents will wipe up to £18 billion from the value of ground rent investments – roughly 0.6 percent of UK GDP – and reduce business investment by as much as £9 billion annually.
Housebuilding concerns raised
The analysis also raises concerns about potential effects on housing supply. WPI suggests housing starts could fall by between 15,000 and 20,000 homes per year, particularly in London and the South East, where flat developments rely heavily on long-term investment structures.
This follows Landlord Knowledge’s recent report on rising service charges, which found leasehold flat owners now pay an average of £200 per month in management fees. The latest analysis suggests that while ground rent caps will ease one cost pressure, they may create unintended benefits for landlords who already hold leasehold rental stock.
A Ministry of Housing spokesperson rejected the claims, telling GB News: “Ground rent is money for no clear service in return, and in the worst cases, leaseholders face spiralling costs. The notion that this cap will harm housebuilding is nonsense. It will reduce costs for leaseholders and make the housing market more efficient by simplifying the buying and selling process.”
The research was commissioned by the Residential Freehold Association.
What this means for landlords
- If you own leasehold BTL properties: The £250 annual cap could reduce your operating costs and increase net yields once implemented.
- Watch for: Implementation timeline details – the government has not yet confirmed when the cap will take effect for existing leases.
- Bottom line: Landlords holding leasehold flats stand to benefit financially, though the wider market effects remain uncertain.
Editor’s view
This is an unusual case where regulatory reform designed to protect consumers may inadvertently benefit landlords. The £8.7 billion figure is attention-grabbing, but the real question is whether reduced ground rents will be passed on to tenants through lower rents – or simply absorbed as improved margins.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 12 March 2026
Sources: WPI Strategy, Ministry of Housing, Communities and Local Government
Related reading: Service charges hit £200 a month as flat ownership costs surge
