tax & costs
Ground rent
Ground rent is a regular payment a leaseholder makes to the freeholder under the terms of the lease. It is separate from the service charge, which pays for running and maintaining the building.
In simple terms
Ground rent is a yearly sum a leaseholder pays the freeholder. It is separate from service charge, and the rules depend on when the lease was granted.
Example
A buyer is offered a flat on a lease granted in 2015 that includes ground rent. The seller's solicitor confirms the amount and whether it ever increases. A similar flat on a new lease granted in 2024 is sold with a peppercorn ground rent, which means none is payable.
If you're buying
The rules depend on when the lease was granted. GOV.UK says leases granted on or after 30 June 2022 usually limit ground rent to a peppercorn, which is zero. Leases granted before that date can still carry ground rent, and the 2022 changes do not remove it if you buy an older lease from another leaseholder after that date. On those older leases you only have to pay if the landlord sends a formal written demand, and unpaid ground rent can be recovered for up to 6 years. On 27 January 2026 the government announced a plan to cap ground rent at 250 pounds a year and reduce it to a peppercorn after 40 years for older long residential leases, alongside a draft Commonhold and Leasehold Reform Bill. GOV.UK said the cap could come into force in late 2028, subject to parliamentary timings, so this was a plan and not law when checked on 30 October 2026. Ask your solicitor to confirm the position, whether the rent rises, and whether your lender objects to the terms. (Sources read 30 October 2026: GOV.UK service charges and other expenses; GOV.UK announcement of 27 January 2026.)
If you're selling
If your lease has ground rent, make sure you have paid every demand and can show it. A buyer's solicitor will ask for receipts and the current demand. Escalating ground rent can put off buyers and lenders, so ask your solicitor whether it is worth speaking to the freeholder before you list. Do not advertise a cap or reduction as certain until it is law.
Related terms