tax & costs
Peppercorn rent
A peppercorn rent is a nominal rent, in practice nothing, payable under a lease. In leasehold housing it means the leaseholder pays no real ground rent.
In simple terms
A peppercorn rent means zero in practice. Most new long residential leases granted from 30 June 2022 can only charge it.
Example
A buyer is told a new-build flat has a peppercorn ground rent. They pay no yearly ground rent to the freeholder but still pay a service charge for the building. Another buyer's older lease charges a fixed yearly sum, so the two flats have different running costs even at the same price.
If you're buying
GOV.UK says that for leases granted on or after 30 June 2022, ground rent is usually limited to a peppercorn rate, which is zero. That comes from the Leasehold Reform (Ground Rent) Act 2022, which also requires a peppercorn rent for the new term of a non-statutory lease extension. It does not cover older leases, including an older lease you buy from another leaseholder after that date. Ask your solicitor to confirm the lease start date and wording rather than relying on the advert. A peppercorn ground rent does not remove the service charge or the cost of major works, so ask for the last three years of service charge accounts as well. The government announced on 27 January 2026 that older leases would also move to a peppercorn after 40 years under a planned cap, subject to Parliament. (Sources read 30 October 2026: GOV.UK service charges and other expenses; GOV.UK announcement of 27 January 2026; GOV.UK consultation on quid pro quo leases.)
If you're selling
A peppercorn ground rent is a plus point in your listing, but only if the lease says so. Check the wording in the lease rather than relying on an agent's summary, and keep a copy ready for your solicitor so enquiries are answered quickly.
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