Glossary · UK
What is Ground Rent?
A payment a leaseholder makes to the freeholder for the land on which a leasehold property stands.
Full Definition
Ground rent is a charge a leaseholder pays to the freeholder, or landlord, as a condition of the lease, in return for occupying the land on which the property sits. It is separate from any service charge, which covers maintenance of communal areas. Historically some leases included ground rents that rose sharply over time, which caused problems for owners trying to sell or remortgage. Reforms have changed this: under the Leasehold Reform (Ground Rent) Act 2022, ground rent on most new long residential leases is restricted to a peppercorn, meaning effectively nil, so qualifying new leases cannot charge a real monetary ground rent. Many existing leases, however, still contain ground rent obligations, and the rules differ for those, so leaseholders should check the specific terms in their lease. Where ground rent is payable, the freeholder must follow a formal demand procedure for it to be due. Buyers of leasehold property should review the ground rent terms carefully, as onerous or escalating clauses can affect value and mortgageability. Always confirm the current legal position and your lease wording before buying.