Finance glossary
Ground Rent
In simple terms
Ground rent is a charge a leaseholder pays to the freeholder for the land the property sits on. On most new leases it has now been reduced to a “peppercorn” — effectively nothing.
On this page
What does ground rent mean?
Ground rent is a payment a leaseholder makes to the freeholder simply for occupying the land the building stands on. It is separate from any service charge, which covers maintenance of the building.
It has traditionally been a modest annual sum, but some older or more recent leases contained clauses that let it rise sharply over time.
How ground rent works
The amount and how it can change are set out in the lease. Some leases fixed it at a small sum; others let it double every 10 or 25 years, which could make the property hard to sell or mortgage.
For most new long residential leases granted since June 2022, ground rent is limited to a “peppercorn” — a legal token of no real monetary value — so no genuine ground rent is payable.
How could this affect me?
If you buy an older leasehold property, check exactly what ground rent is due and how it can rise — an escalating clause is a red flag that can affect value and mortgageability.
Where ground rent is still payable, the freeholder must follow the correct process to demand it, and there are limits on the action they can take purely over unpaid ground rent.
Things to watch out for
- Escalating or “doubling” ground rent clauses in older leases can make a property hard to sell or mortgage.
- Ground rent is separate from the service charge — check what each one covers.
- Always confirm the ground rent terms in the lease before buying, not just the current figure.
Know your rights
- The Leasehold Reform (Ground Rent) Act 2022 limits ground rent to a peppercorn on most new residential leases in England and Wales.
- A freeholder must follow the correct legal process to demand ground rent, and there are restrictions on enforcement for unpaid ground rent alone.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Ground rent for new leases (opens in a new tab). Accessed 22 Aug 2026.
- legislation.gov.uk, Leasehold Reform (Ground Rent) Act 2022 (opens in a new tab). Accessed 22 Aug 2026.