One of your household bills is about to rise, while another may be come down. From April, higher water charges approved by Ofwat will start to show up in monthly bills. At the same time, the government’s move to cap ground rent could save some homeowners hundreds in fees paid to freeholders. Here’s what you need to know.
🇬🇧 Water Bills Set to Rise in April
From April 2026, most households in England and Wales will see their annual water and sewerage bills increase by around 5.4%, adding an average of £33 per household per year to typical bills. That pushes the average combined bill to roughly £639 a year.
It follows the regulator Ofwat’s periodic review of what water companies are allowed to charge and comes at a time when utility costs are already under scrutiny from consumers.
The UK water industry in England and Wales is structured around regional monopolies, where one company provides water supply and wastewater services in a defined area and most households cannot choose a different supplier. This has been the case since privatisation in 1989, when former public water authorities were transferred into private companies that now hold exclusive rights to serve particular regions. A market like this arises because building and maintaining separate networks of pipes, treatment works and reservoirs in the same place would be inefficient, making it impractical for multiple companies to compete for the same customers.
Because consumers cannot switch between providers in most parts of England and Wales, the industry is subject to economic regulation to protect household and business users. The economic regulator, Ofwat, sets limits on the prices companies can charge and oversees how they balance investment, service quality and cost to customers through a regular five-year price review process.
The upcoming increase reflects a significant investment programme planned across the industry, with water companies signalling the need for billions of pounds to upgrade aging infrastructure and reduce environmental damage. Water bodies and customer groups point out that decades of underinvestment have left pipes leaking and sewage overflows occurring too frequently. Water UK, the industry body, says much of the money raised will be used for essential work such as reducing pollution and securing future water supplies.
Different regions will be affected in different ways. Some companies, such as Southern Water and United Utilities, are applying higher cash increases in the £50–£60 range, while others like Thames Water have much smaller rises because they applied larger increases in previous years.
For households, this translates into a modest rise on monthly statements. £2.70 a month. That feels small on a single bill, but in the context of the wider cost of living, where energy, food and rent have all put pressure on budgets in recent years, even this incremental increase adds to the sense of financial squeeze.
There are support measures, such as social tariffs and schemes like WaterSure that help certain low-income or high-usage households, but critics of the rise argue that these schemes are inconsistent and don’t reach everyone who may struggle with the added cost.
Between 2025 and 2030, Ofwat has set overall permitted increases that could push bills up much further over several years. These long-term allowances underline the scale of the challenge in modernising an infrastructure system that has faced repeated environmental and service quality challenges.
UK Government Caps Ground Rents Paid to Freeholders
The UK Government has introduced a major change to how ground rents will work in England and Wales under a proposed update to leasehold law. Known as the Commonhold and Leasehold Reform Bill, this legislation will limit annual ground rents on existing residential leases to £250, with the intention that these rents will be effectively negligible after 40 years.
To understand why this matters, it helps to briefly explain how property ownership works in the UK. When you buy a freehold property, you own the building and the land it sits on outright. When you buy a leasehold, you own the property for a set number of years but not the land. You pay a ground rent to the freeholder (the landowner) for that right, usually each year. Historically, ground rent was a small, largely symbolic charge, but over time some freeholders inserted escalating or high charges into leases that increased the lifetime cost of ownership.
For many leaseholders, especially flat owners, high ground rents have translated into practical problems. Some lenders have refused to offer mortgages on properties with steep or escalating ground rents. This has made it harder to sell or remortgage such homes. The new proposal directly addresses these issues by capping the amount that can be charged, reducing ground rent to something predictable and far lower than many current contracts allow.
The reforms build on earlier changes that already banned ground rent for most new leaseholds. What’s different now is that existing leases will be covered too. In other words, if you already own a leasehold property, you may see the amount you pay each year fall to the new cap over time as the rules are phased in. This is expected to benefit hundreds of thousands of leaseholders who currently pay more than the £250 cap set out in the draft legislation.
There are broader changes tied to these reforms as well. The bill proposes banning the creation of new leasehold flats entirely, allowing future homes to be owned under commonhold arrangements where flat owners jointly own and manage the building, rather than paying a separate freeholder.
The immediate effect for homeowners and renters varies. If you are a leaseholder paying high ground rent, this cap could save you thousands of pounds over the lifetime of your lease, and ease the process of selling or remortgaging. Estimates suggest savings of around £4,000 per leaseholder over time, though the full reforms are not expected to take effect until the late 2028 implementation date.
How you feel about this change depends largely on where you’re standing. If you own a leasehold flat, the cap removes a cost that often felt arbitrary and hard to justify. If you’re an investor who owns freeholds, it reduces the value of an income stream they paid for. At its core sits the question of how you balance the functions of housing. How much does the potential for long-term growth matter when it comes at the expense of predictable, manageable costs for the people living there?
💼 Unpacked
Ofwat
The economic regulator for water and sewerage services in England and Wales. It sets limits on the prices water companies can charge, oversees investment and service standards, and attempts to ensure that water companies balance the needs of customers, infrastructure, and the environment.
Monopolies – Natural and Regional
A natural monopoly occurs when a service is most efficiently provided by a single supplier, usually due to high infrastructure costs. In the UK, water is also a regional monopoly, meaning each company serves a specific area without competition from others.
Commonhold vs Leasehold
Leasehold means you own a property for a fixed period but pay ground rent to the freeholder. Commonhold lets property owners jointly own and manage the building without paying a freeholder, giving more control and predictable costs.
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Sources
British Brief
Department for Environment, Food and Rural Affairs
Featured Image: Flickr, Calculator next to £20 notes
