What Is Ground Rent?

“What is ground rent?” is a question we get asked a lot, so we thought it’d be useful to put together a quick guide for you to explain exactly what it is.

The leasehold system in England and Wales dates back to William the Conqueror who claimed that all land was now under his ownership.  Estates were granted to wealthy land owning Lords who were then able to charge the people living on that land to be there – an early lease.  This framework has existed and evolved since medieval times until today and as such the owner of the freehold title of land still has the right to charge ground rent to those who occupy it.

Apartments can never be sold with an absolute freehold title as by nature they are built on top of each other and therefore occupy the same area of land.  As such it is necessary for the freeholder of the land to attach a ground rent to each apartment to permit it to be there.  Sometimes the rent is described as a peppercorn, which is in legal parlance a ground rent of such nominal value that it will never be collected.  However sometimes the ground rent is a monetary amount as specified within the lease or transfer documentation for each property, and sometimes this amount can be reviewed and altered at set specified periods.  A ground rent can also be known as a chief rent and this term is sometimes used with leasehold houses.

If you are being asked to pay a monetary rent then you are legally obliged to pay this amount in full.  Ground rent is a contractual rental payment for the occupation of part of an area of land and anything occupying that space.  If you fail to pay your rent than the freeholder of the land could reclaim your property as their own for breaching the contractual agreement.

“What is ground rent?” is completely unconnected to the service charge and is not related to the provision of maintenance or services, however sometimes the managing agent (Realty) is asked to collect the ground rent on behalf of the freeholder.

Further questions? Contact us.