The Residential Freehold Association, which represents professional freeholders, said capping ground rent was “wholly unjustified” and warned over the impact on the UK’s reputation for investors.
A spokesperson said the bill “will tear up long-established contracts and property rights, which are pillars of the UK’s investment reputation”.
Campaigners had called for a cap, saying that escalating ground rents had left leaseholders struggling to sell their homes.
However, some had wanted the government to go further and limit ground rent to a peppercorn rate – effectively zero.
Harry Scoffin, founder of campaign group Free Leaseholders, said: “If leaseholders are paying for nothing, they should be paying nothing today, not in 2068.”
The National Leasehold Campaign said while it was disappointed at the government’s decision not to enforce immediate peppercorn ground rents, it welcomed the cap.
“It’s also encouraging that the government recognises that monetary ground rents must end,” said Jo Darbyshire, the group’s co-founder.
“However, 40 years is an incredibly long time to wait for peppercorn ground rents.”
Many leaseholders also complain of high service charges, which they have no control over and must pay for the management and maintenance of their building.
The government says its leasehold reforms will build on planned changes to make service charge bills clearer and help people challenge unfair costs.
An estimated 99% of flat sales in 2024 in England were leasehold.
The English Housing Survey has estimated that in 2023/24, leasehold owner-occupiers reported paying an average annual ground rent of £304 a year.
In 2024, when Labour were in opposition, the current Housing Minister Matthew Pennycook said his preference was for ground rents to be capped at effectively zero.
Writing in the Guardian earlier this month, Rayner said ministers were “subjected to furious lobbying from wealthy investors” trying to water down the commitment and warned people may lose faith if the party could not fix the “obvious injustice” with a cap.
And last week, former Labour minister Justin Madders told the BBC the prime minister could face a “mass rebellion” if the government abandoned its pledge to cap ground rents.
He said setting the limit at a peppercorn rate would be his preferred choice but that he could accept a £250 cap due to the “risk of elongated legal challenge”.