Ground Rent
A payment a leaseholder makes to the freeholder under the terms of a lease. For most new long residential leases granted after 30 June 2022, the Leasehold Reform (Ground Rent) Act 2022 caps ground rent at a 'peppercorn' — effectively zero financial value. Ground rent on many older leases can still be a real, sometimes escalating, charge.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Official guidance on the 2022 reform explains the new baseline for leases it covers: 'After the Act comes into force, ground rent in most new leases cannot legally be for anything more than "one peppercorn per year". This "peppercorn rent" means that no money can be legally charged or paid as ground rent on leases regulated by this Act.' The reform also closes off a related charge: 'The Act bans freeholders from charging administration fees for collecting a peppercorn rent' — so a freeholder cannot recreate a real cost simply by billing for the (worthless) peppercorn's collection.
The peppercorn requirement is not automatically retrospective for every existing lease, but it does reach some transactions on older leases: guidance confirms that 'for existing leaseholders entering into voluntary lease extensions after commencement, the extended portion of their lease will be reduced to a peppercorn' — meaning a leaseholder who voluntarily extends an older lease gets peppercorn ground rent on the extended term, even though the original term of that lease may still carry its original ground rent terms.
Related terms
Official sources
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