Ground rent is a regular payment that a leaseholder makes to the freeholder under the lease. It is separate from the service charge, which pays for running the building. Since the Leasehold Reform (Ground Rent) Act 2022, most new long residential leases in England and Wales have a peppercorn ground rent, which in practice means nil.
Why It Matters
- —Existing leases can still carry a ground rent, so read the amount and any increase terms in the lease before buying a resale flat.
- —A draft Bill for England and Wales would cap ground rents on existing leases at £250 a year, falling to a peppercorn after 40 years. It was not law when last checked in November 2026, and the government says the cap could start in late 2028.
- —Many other markets have no direct equivalent. Malaysian parcel rent and quit rent, for example, go to the state, not to a private freeholder.
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