What is ground rent on a leasehold property?

Ground rent is a charge paid by the leaseholder to the freeholder (landlord) in return for the right to occupy the land on which the property sits. It is set out in the lease agreement and is separate from service charges. Ground rent can be a fixed annual amount or can escalate over time according to a formula written into the lease.

What did the Leasehold Reform (Ground Rent) Act 2022 change?

The Leasehold Reform (Ground Rent) Act 2022 came into force on 30 June 2022 and abolished ground rent on most new residential leases in England and Wales. Ground rent on new leases is restricted to a 'peppercorn' — effectively zero. This means developers can no longer sell new leasehold homes with escalating ground rents. The Act does not apply to existing leases agreed before June 2022.

What does doubling ground rent mean?

Doubling ground rent is a common escalation clause found in older leases, typically pre-2010. The rent doubles at set intervals — often every 10 or 25 years. A ground rent starting at £250 per year doubling every 10 years becomes £500 after year 10, £1,000 after year 20, £2,000 after year 30, and so on. This type of escalation has been linked to reduced property values and difficulty obtaining mortgages.

How does ground rent affect a mortgage application?

Many lenders refused to lend on properties where ground rent exceeded 0.1% of the property value, or where doubling clauses could cause ground rent to reach that threshold within 25 years. Under UK Finance and the Mortgage Charter 2023 guidelines, lenders have updated their criteria. Properties with historic doubling ground rents may still face mortgage difficulties, and freeholders offering lease variations or buy-outs can improve mortgageability.

Can I extend my lease to reduce ground rent?

Yes. Under the Leasehold Reform, Housing and Urban Development Act 1993, qualifying leaseholders can extend their lease by 90 years and reduce the ground rent to a peppercorn (zero) for the extended term. Qualifying criteria include owning the flat for at least two years. The cost of lease extension depends on the remaining lease length, ground rent, and property value — use our lease extension calculator for an estimate.

What is the Leasehold and Freehold Reform Act 2024?

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. Key changes include making it easier and cheaper to extend leases or buy the freehold, improving leaseholder rights over service charges and management agents, banning new leasehold houses except in specific circumstances, and strengthening rights for existing leaseholders. Many provisions are being phased in as secondary legislation is introduced throughout 2024–2026.

How do I calculate total ground rent over the lease term?

For fixed ground rent, multiply the annual amount by the number of years. For doubling ground rent, calculate each period separately and sum: if rent is £300 doubling every 10 years, the first 10 years total £3,000, next 10 years £6,000, next 10 years £12,000, etc. For RPI-linked rent, apply the average RPI rate to each year's rent. Our calculator above handles all three escalation types automatically.

What is a peppercorn rent?

A peppercorn rent is a nominal or zero rent required in law to make a lease legally valid. In UK leasehold law, peppercorn rent means effectively no rent is paid — the freeholder cannot enforce collection of this nominal charge. Since the Leasehold Reform (Ground Rent) Act 2022, all new residential leases in England and Wales must have peppercorn ground rent.

Ground Rent Calculator

Last updated: February 2026 | Author: Mustafa Bilgic (MB)

Updated for Leasehold and Freehold Reform Act 2024 • Includes peppercorn rent rules for new leases

Ground Rent Cost Calculator

Enter your current ground rent details to see total costs over 10 and 25 years, and whether you should consider a lease extension.

Current Annual Ground Rent (£)

Escalation Type

Escalation Period (years)

Years Remaining on Lease

Estimated Property Value (£)

Lease Extension Cost Estimate (£)

2024 Leasehold Reform Act: All new residential leases in England and Wales since 30 June 2022 must have a peppercorn (zero) ground rent. The Leasehold and Freehold Reform Act 2024 makes it easier and cheaper for existing leaseholders to extend leases or buy their freehold. If your lease was granted before June 2022, the rules below apply to you.

What is Ground Rent?

Ground rent is a regular charge paid by the owner of a leasehold property to the freeholder — the person or company that owns the land beneath the property. It is a fundamental feature of leasehold tenure in England and Wales, which affects approximately 4.9 million leasehold dwellings according to DLUHC data.

When you buy a leasehold flat or house, you are purchasing the right to occupy the property for the duration of a long lease, typically 99, 125, or 999 years. You do not own the land itself — the freeholder does. Ground rent is the freeholder's return for granting you this right of occupation.

The amount of ground rent, how often it is reviewed, and how it escalates is defined in the lease agreement. Ground rent clauses vary enormously: some leases have zero ground rent (peppercorn), others a nominal fixed amount such as £50 per year, and others include escalation clauses that can significantly increase the charge over time.

Types of Ground Rent Escalation

1. Fixed Ground Rent

A fixed ground rent remains the same throughout the lease term. If your lease says £150 per year ground rent and it is fixed, you will pay £150 every year for the remainder of the lease. This is the most straightforward and least risky form of ground rent. Fixed ground rents have minimal impact on property values and mortgage availability.

2. Doubling Ground Rent

Doubling clauses were commonly written into leases between roughly 1990 and 2010. The ground rent doubles at fixed intervals — typically every 10 or 25 years. A £250 annual ground rent doubling every 10 years will reach £500 after 10 years, £1,000 after 20 years, £2,000 after 30 years, and £4,000 after 40 years.

This type of escalation has been the subject of significant controversy and legal action. The Competition and Markets Authority (CMA) investigated several large housebuilders in 2021 and secured commitments to remove doubling clauses from existing leases. Properties with doubling ground rents can be difficult to sell or remortgage.

3. RPI-Linked Ground Rent

Some leases link ground rent to the Retail Price Index (RPI). The rent is reviewed at intervals — typically every 5 years — and increases in line with cumulative RPI inflation. Over the long term, RPI-linked rents tend to be less severe than doubling clauses but can still represent significant increases in a high-inflation environment.

The Leasehold Reform (Ground Rent) Act 2022

This landmark Act, which came into force on 30 June 2022, fundamentally changed the rules for new leases in England and Wales:

New residential leases: Ground rent is restricted to a peppercorn — effectively zero. Landlords cannot charge or demand any ground rent on new qualifying leases.
Retirement housing: Peppercorn requirements were extended to retirement housing leases from 1 April 2023.
Penalties: Freeholders charging more than a peppercorn rent on new leases face fines of up to £30,000.
Existing leases: The Act does not retrospectively apply to leases granted before June 2022. Leaseholders on older leases continue to pay ground rent as set out in their original lease agreement.

The Leasehold and Freehold Reform Act 2024

Receiving Royal Assent on 24 May 2024, this wider reform Act builds on the 2022 Act and addresses the broader leasehold system. Key provisions affecting ground rent and lease extension include:

Easier lease extensions: The qualifying period to extend a lease is reduced. Leaseholders can begin the process sooner after purchase.
Cheaper lease extensions: The valuation methodology for calculating lease extension premiums is being reformed to reduce the cost for leaseholders.
Ban on leasehold houses: New houses in England and Wales can only be sold as freehold unless there is a specific justification (e.g., shared ownership).
Transparency on service charges: Freeholders and managing agents must provide more detailed, standardised accounts for service charge expenditure.
Right to manage: Qualifying criteria for leaseholders to take over management of their building are relaxed.

How Ground Rent Affects Property Value

Ground rent — particularly when subject to escalation clauses — has a direct negative impact on property value. The main mechanisms are:

Mortgage Availability

Lenders assess whether a property is mortgageable based on the ground rent level relative to property value. UK Finance guidance (adopted by most major lenders) flags properties where ground rent exceeds 0.1% of property value as potentially problematic. On a £300,000 flat, that threshold is £300 per year. Ground rent above this level — or where doubling clauses will carry the rent above this level within the mortgage term — can result in refused mortgage applications.

Buyer Perception

Buyers are now more aware of ground rent issues. Properties with problematic ground rent clauses often sell at a discount or take longer to sell. The Law Commission's 2020 reports on leasehold reform raised public awareness significantly.

Lease Length

Lease length compounds ground rent concerns. A lease below 80 years triggers the "marriage value" premium in lease extension calculations, significantly increasing cost. Below 70 years, many lenders will not provide mortgage finance at all.

When Should You Extend Your Lease?

The golden rule in leasehold property management is: extend your lease before it falls below 80 years. Here is why:

Below 80 years: Marriage value becomes payable. You must share 50% of the increase in property value attributable to the extension with the freeholder. This can add tens of thousands of pounds to the extension cost.
Below 70 years: Many mortgage lenders will not lend, severely restricting your pool of potential buyers and your ability to remortgage.
Below 60 years: The property becomes very difficult to sell. Cash buyers at a discount may be your only option.

You can begin the statutory lease extension process (under the 1993 Act) once you have owned the property for two years. The extension grants 90 additional years plus the unexpired term, with ground rent reduced to peppercorn for the entire extended period. Even if your current lease has 100 years remaining, extending now locks in lower extension costs and eliminates ground rent going forward.

Lease Extension: Statutory vs Voluntary

Statutory route: Under the Leasehold Reform, Housing and Urban Development Act 1993, you serve a Section 42 notice on the freeholder. The premium is calculated according to a statutory formula. If you cannot agree on the price, the First-tier Tribunal (Property Chamber) determines the fair value. The statutory route gives you legal certainty but involves professional fees (surveyor, solicitor) typically totalling £2,000–£5,000.

Voluntary (informal) route: You approach the freeholder directly and negotiate a price. This can be quicker and cheaper, but you have less legal protection if negotiations break down. Always instruct a specialist leasehold solicitor before signing any voluntary extension agreement.

Ground Rent and the Leasehold Mis-Selling Scandal

Between approximately 2000 and 2017, several major housebuilders sold new-build leasehold houses — not flats — with onerous ground rent escalation clauses, often without adequately explaining the long-term implications to buyers. Persimmon, Taylor Wimpey, Bellway, and others became subjects of CMA investigations. Taylor Wimpey's ground rent review scheme, operating from 2018, offered affected leaseholders a conversion of doubling clauses to RPI-linked escalation. The CMA's 2021 investigation resulted in Countryside Properties, Taylor Wimpey, Aviva, and Adriatic Land agreeing to remove doubling escalation clauses from leases they control.

If you bought a new-build leasehold house between 2000 and 2017 with a doubling ground rent, you may be entitled to a lease variation at no cost. Contact the National Leasehold Campaign or your solicitor for advice.