What is ground rent?
Ground rent is a periodic sum a leaseholder pays the freeholder under the lease, simply for the land the building sits on. It is separate from — and not part of — the service charge. Since 30 June 2022, most new long residential leases can only charge a "peppercorn" (effectively zero) ground rent.
Ground rent is one of the defining features of leasehold. A long lease grants you the right to occupy a flat for a fixed term — often 99, 125 or 999 years — but the freeholder retains ownership of the land. Ground rent is the periodic sum the lease requires you to pay for that land. It is a pure rent for the ground, not a payment for any service, which is what sets it apart from your service charge.
Ground rent is not a service charge
This distinction matters. The service charge covers the cost of running the building — repairs, cleaning, insurance and management — and is regulated by the Landlord and Tenant Act 1985, including the reasonableness test in Section 19. Ground rent is a separate contractual obligation to the freeholder for the land itself. The two are usually demanded separately and governed by different rules, so a problem with one does not automatically affect the other. If your ground rent and service charge arrive on a single demand, check which sum is which before you pay.
The Leasehold Reform (Ground Rent) Act 2022
The Leasehold Reform (Ground Rent) Act 2022 restricted ground rent to a "peppercorn" — a nominal rent with no real monetary value, meaning you effectively pay nothing — for most new long residential leases granted from 30 June 2022. Crucially, it did not change existing leases. If your lease was granted before that date, the ground rent it sets out generally still applies.
Escalating and "doubling" ground rents
The main ground-rent problem in older leases is escalation. Some leases set a ground rent that rises at fixed intervals — for example doubling every 10, 15 or 25 years. Over the life of a long lease, a "doubling" ground rent can climb from a modest figure to thousands of pounds a year, and a ground rent above certain thresholds can make a flat harder to sell or mortgage. Escalating ground rents in older leases have been a widely reported problem, and a lease extension (which resets the ground rent to a peppercorn) is often the cleanest way out.
Make sure the demand is valid
Ground rent, like a service charge, generally has to be properly demanded before it is payable. If the freeholder has not served a valid demand — for example one missing the landlord's name and address — the sum is generally not payable until the defect is put right, and money withheld for that reason is not treated as being "in arrears". See our explainer on what makes a demand valid.
How this shows up in your service charges
Ground rent and service charge often land on the same statement, and it is easy to overpay when the two are muddled together. Our free AI audit reads your demand, accounts and lease and separates what you owe as a service charge — and how much of it could be challengeable under the Landlord and Tenant Act 1985 — from your ground rent obligation.
Start my free audit