What is Ground Rent?
Ground rent is an annual payment made by a leaseholder to the freeholder (landlord) of a property. It's essentially rent for the land that your property sits on.
How Much is Ground Rent?
Ground rent varies significantly between properties:
- Peppercorn rent: A nominal amount (often £0 or a few pounds per year)
- Fixed rent: A set amount that doesn't change (e.g., £250 per year)
- Escalating rent: Rent that increases over time, either at fixed intervals or linked to RPI/CPI
Why Does Ground Rent Matter?
Ground rent is important because:
- Mortgage implications: Some lenders won't mortgage properties with high or escalating ground rents
- Lease extension costs: Higher ground rents increase your lease extension premium
- Selling your property: Properties with high ground rents can be harder to sell
The 2022 Leasehold Reform
The Leasehold Reform (Ground Rent) Act 2022 restricted ground rent to a peppercorn (essentially £0) for most new residential long leases granted on or after 30 June 2022.
Extending Your Lease
When you extend your lease through the statutory route, your ground rent is automatically reduced to a peppercorn (£0) for the extended term. This is one of the key benefits of extending your lease.
