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Glossary

Ground rent

Also called: rent, peppercorn rent

The rent a leaseholder pays the landlord under the lease, separate from the service charge, which is only payable once the landlord has sent a notice in the prescribed form.

Ground rent is the landlord's income from owning the freehold. It doesn't pay for running the building.

Key points

  • A notice is needed first. A leaseholder doesn't have to pay ground rent unless the landlord has sent a notice in the prescribed form. The payment date in the notice must be at least 30 and no more than 60 days after it's given (s.166).
  • RTM companies don't collect it. The right to manage transfers management functions, not the rent, so ground rent still goes to the landlord.
  • Freehold companies may collect it. If leaseholders own the freehold together, the company may receive ground rent, or the members may agree to reduce it to a peppercorn when leases are extended.
  • New leases. Most new long residential leases granted from 30 June 2022 can only have a "peppercorn" (zero) ground rent (Leasehold Reform (Ground Rent) Act 2022).

Related terms

Guides that use this term

Sources

  1. Commonhold and Leasehold Reform Act 2002, s.166 (requirement to notify long leaseholders that rent is due)
  2. Leasehold Reform (Ground Rent) Act 2022

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