Ground Rent

Intermediate

Ground rent is a regular payment that a leaseholder makes to the freeholder of the land on which their property stands, as required by the terms of the lease.

Ground rent is most commonly associated with leasehold properties in England and Wales. Historically, it was often a small, nominal amount, but some leases created in recent decades include ground rents that double every ten or fifteen years, which can make properties hard to sell or mortgage.

For example, a lease might set ground rent at 250 a year, doubling every ten years. After 40 years, it would reach 4,000 a year.

Concerns about onerous ground rents led to reform. The Leasehold Reform (Ground Rent) Act 2022 effectively set ground rent at zero for most new residential long leases in England and Wales from June 2022. Existing leases are largely unaffected, although further reforms to cap or limit ground rent on existing leases have been under discussion.

Ground rent is separate from service charges, which pay for maintenance of shared areas. Failing to pay ground rent can, in some circumstances, put the leaseholder in breach of the lease. Buyers should check the ground rent terms carefully before buying a leasehold property.

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