Ground rent

Ground rent issues

The issue of ground rent has been a regular highlight in the news over the last couple of years and is beginning cause concern with those in the property industry.

Ground rent is where a person with the leasehold of a property must pay an annual ‘rent’ to the freeholder, under the terms of the lease.

The ground rent is generally quite a low amount, but it can be fixed or escalating, meaning that it will increase during the term of the lease, again, this will be under the terms of the lease.

Unfortunately, depending on the frequency and whether the rent increases each year, can have an affect on the value of your property.

When considering a leasehold property with a ground rent that periodically increases, you need to consider not just what the ground rent is now, but what it could possibly increase to.

If the ground rent increases to a point you are unable to afford it the landlord can take you to court to recover the debt, and in some cases start forfeiture proceedings.  If the landlord is successful in these proceedings, they can recover the possession of your home, but to do so, you must have an amount outstanding that exceeds £350 and been for over 3 years.

One option to the leaseholder of a flat to stop the rise in ground rent is to extend their lease.   Although not technically extending the lease, as you actually surrender the right to the lease and acquire a new lease on the property on the same terms, except that the ground rent will be at ‘peppercorn’ and for 90 years.

This obviously does not come for free; you will need to pay a premium to the landlord to compensate them for the fact that they will no longer receive or possession of the property at the end of the original lease.

You also need to be a ‘qualifying tenant’ to be able to apply for the extension.  This means:

  • The lease had been for a fixed term of more than 21 years
  • The flat forms part of a larger building
  • It is a dwelling that is mainly above or below another part of the building.

The law in this area can be quite complicated, therefore it is recommended that you see a specialist solicitor

If you would like to speak to one of our expert Conveyancing solicitors contact a member of our team today, on 0345 2413100 or email us at