What is a ground rent?
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What is a ground rent?

Ground rent is a contractual rental payment for the occupation of part of an area of land and anything occupying that space.

In basic terms, an owner of an area of land, known as a Freeholder could offer part of their land to a potential purchaser via document know as a lease, which allows a leaseholder to occupy a section of their land for a set time period.

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 issue a lease and to attach a ground rent to each apartment to permit it to be there. Some houses can also be sold leasehold if built on a freeholders land, and therefore would also be required to pay a ground rent. The amount of ground rent payable is specified within the lease for the property and you are legally obliged to pay this amount in full.

In most cases, ground rent is not applicable to freehold properties, but there can sometimes be rare exceptions, and therefore it is always worth asking your solicitor to explain the terms of your transfer/title deeds.

If you are unsure as to whether your property is leasehold or freehold, then this information can be found via your Solicitor, whom can advise on your properties tenure and obligations; or via the lease/transfer you will have been provided during the purchase of your property.

Ground rent is completely unconnected to a service charge and is not related to the provision of maintenance or services.

What is the lease/transfer and what does it do?

A lease for apartments, lease for leasehold houses, or transfer in the case of freehold houses, sets out the benefits of and obligations associated with a property.

Where properties are required to pay ground rent, the documentation forms a contract that legally obligates the leaseholder or home owner to pay the ground rent and explains the terms under which an individual may occupy the land, and information such as how they are expected to pay their ground rent, how much, how often, and also when this can be reviewed, as it is worth noting that some ground rents can increase over set time periods.

Over the years we have read hundreds of leases and transfers with the amount of ground rents payable varying from monetary values; to peppercorn rents (that are not usually payable); to very unusual rents payable such as: providing the freeholder with a pig and a barrel of beer every Christmas!

The documentation may also contain covenants which may require the occupier to do, or not do, certain things. It is important to know what you can and can’t do in your property to prevent breaching the terms of the documentation. Your solicitor should explain any concerning terms during the course of a purchase of a property, and can provide further explanation if there is anything you are unsure of.

How do I pay the ground rent?

Ground rents are always paid to the freeholder of the land, and therefore they will send out a demand for the payment of the ground rent in line with the terms of the lease or transfer which you have been granted.

On some occasions, the freeholder may appoint an agent to collect the ground rent upon their behalf, or ask the Managing Agent of a property to undertake this task for them. This is done in the form of a demand that will always show the name of the freeholder demanding the rent, how much the rent is, and by when this should be paid.

How do I contact my freeholder?

The details for contacting your freeholder or their appointed agent can be found on your latest ground rent demand. Alternatively if you are a Realty Management customer, you can also request this information from us and we can confirm the name of the freeholder that you will need to get in touch with should you have any questions regarding your ground rent.

In some occasions, such as if you are making alterations to your property or wish to do something that requires consent from the freeholder within your documentation, then it will also be helpful to know this information as you will need to contact your freeholder in advance to check you have permission to do so.