What is Peppercorn Ground Rent?
In a statutory lease extension in England and Wales, the ground rent is legally reduced to what's known as a peppercorn ground rent. This quite literally means paying one peppercorn (the spice you'd grind onto your food) each year. In practical terms, it means leaseholders no longer have to pay any meaningful ground rent going forward.
Origin and Meaning
For a lease to be valid there must be a rent that is paid for you to stay in the property each year. The reason why is that fora contract to be valid it requires a consideration (something of value exchanged). A peppercorn whilst almost worthless meets this criteria. . Typically, leases phrase this as “one peppercorn if demanded,” meaning the landlord theoretically has the right to request this token payment each year—though in reality, there's no practical reason to do so. Even if a landlord did request it, you could simply send one peppercorn to satisfy the demand fully.
Other Peppercorn Rents
A peppercorn became a common choice precisely because it holds basically no value actual, yet legally satisfies the need for a nominal rent.
Because of it's wide use other rents of practically no value are often referred to as a "peppercorn ground rent" – even if they don't require payment in the form of a peppercorn.
For instance, the Covent Garden Market in London is held on a long lease requiring an annual rent of “five red apples and five posies of flowers,” a due to the area’s historic fruit and flower markets. Or the case of land in Suffolk which was leased out by William Clopton in the 15th century for the yearly rent of “one red rose payable each year, if demanded” – remarkably a descendant in 1984 began demanding this token rent, reviving the tradition by placing a red rose on Clopton’s tomb each year.
Other colorful peppercorn rents have included a cricket ball (Sevenoaks Cricket Club’s rent for its pavilion), one crab per year (paid by a coastwatch station on the Encombe Estate), and even one salmon per year (the rent for London’s Billingsgate Fish Market
These nominal payments are purely symbolic and usually ceremonial. Whilst they are not technically a “peppercorn rent” any trivial or novelty item is often referred to as one. The key requirement is that there is a rent which is paid for a lease to be valid, not that the rent has any significant value.
Isn't a £1 ground rent a peppercorn?
People often call very low ground rents (£1 to £12 per year) as "peppercorn rents" due to how small they are. However, strictly speaking under a true peppercorn rent is literally a peppercorn. Any small monetary sum technically constitutes a "nominal ground rent" rather than a genuine peppercorn rent.
So, while informally a £10 ground rent might be described as a peppercorn rent, legally it's just a nominally low ground rent—not literally a peppercorn.
Recent Legal Changes
Following the introduction of the Leasehold Reform (Ground Rent) Act 2022, virtually all new residential leases (with limited exceptions) must set ground rent at a peppercorn level. Statutory lease extensions under the 1993 Act for flats already mandated peppercorn rents, so the new 2022 Act reinforces rather than changes this practice. Government guidance explicitly confirms that statutory lease extensions remain unaffected, as they must already be granted at a peppercorn rent under existing law.
