The Leasehold Reform (Ground Rent) Act 2022 came into force on the 30th of June 2022 for Leaseholders, except in respect of retirement properties where the new legislation will not apply before 1st of April 2023. 


What is Ground Rent?  

‘Ground rent’ is a property industry term that is given to a rent that is usually paid annually by owners of residential long leases to their landlord. 


Long leases are those exceeding 21 years, that frequently require a leaseholder to pay an annual ground rent, often hundreds of pounds a year, for which the landlord does not have to provide a clear service in return. 


So, you might be wondering, what is the Leasehold Reform (Ground Rent) Act?  

The Leasehold Reform (Ground Rent) Act, is a law whereby ground rent in qualifying long residential leasehold properties in both England and Wales, will come to an end in certain circumstances. This Act brings with it one of the most significant changes in property law that experts have seen for some years. The Act will apply to all “regulated leases” which is defined as, 

  • A long lease of a single dwelling. 
  • Granted for a premium. 
  • On or after the relevant commencement day, other than in pursuance of a contract made before that day; and it is an excepted lease. 


What the Ground Rent Act means for you?  

The Act will make home ownership fairer and more transparent for millions of future leaseholders. The Act will prevent, unfair practices that have seen some leaseholders contractually obligated to pay onerous and escalating ground rents. 

The Ground Rent Reform means that any new lease (unless it is an Excepted Lease under the Act) granted after the 30th of June 2022 can only be subject to a peppercorn rent. 


If you have an existing lease, unfortunately the Act is not retrospective, meaning the ground rent on a lease granted before the 30th of June 2022 will remain. 

Should you agree to extend the lease with the freeholder (not via statute) the ground rent would remain payable until the new term commenced. 


This Act also imposes fines between £500 and £30,000 which may be levied where the enforcing authority is satisfied beyond reasonable doubt that there is a breach of the Act. 

This Act may affect those trying to sell their lease after the 30th of June 2022 as potentially they could be seen as less attractive to buyers, than a new lease with no ground rent or subsequently those with an investment interest seeking to grant a lease. 


What is a ‘peppercorn’ ground rent?  

This Act defines peppercorn rent for the first time; this is the annual rent of one peppercorn. The Act restricts ground rents on new leases (unless an excepted or non-regulated lease) to a peppercorn rent, effectively restricting these ground rents to zero financial value. 


What should I do if my lease says I must pay a ground rent?  

Check whether your lease is covered by this Act. Remember the Act’s peppercorn limit only applies to leases granted on or after 30 June 2022. 


If your lease is regulated by the Act and says a ground rent is required initially you should speak to an expert who can review the lease. Here at Smith Benedict, our team of experts can review your lease to confirm whether you are required to make these payments. 


Call a member of our team today!  

Call: 01302986504  


To find out more visit: 

Paragon Legals is a Trading name of Haven Solicitors authorised and regulated by the Solicitors Regulation Authority SRA No. 819245.

Haven Solicitors is a Limited Company registered in England and Wales whose registered office is at Commer House, Tadcaster Enterprise Park, Station Road, Tadcaster, North Yorkshire, LS24 9JF. Privacy Policy.