Leasehold ground rent changes, explained for Lymington by Lester Aldridge

Pounds to peppercorns: good news for leaseholders!

 Lester Aldridge Solicitors with a welcome update on the rules regarding leasehold ground rents, which are changing in England and Wales


Ed Note: Life Matters for Lymington by Lester Aldridge this month provides us with an update about changes in leasehold ground rents, which will be welcome news for leaseholders. Members of the Lester Aldridge team are always happy to help with individual enquiries and offer a free initial consultation of which you can take advantage at any time:

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Hands holding money and model house

Leasehold ground rents are changing in England and Wales

From 30 June 2022, buyers of new qualifying residential long leases in England and Wales will be required to pay just a peppercorn ground rent to the freeholder or landlord.

If you own a residential property on a long leasehold basis in England and Wales then you will usually be required to pay rent to the freeholder or the landlord, which is known as ‘ground rent.’

The level of ground rent which is to be paid to the freeholder or the landlord will be specified in the lease and will vary depending on the terms of the lease. Some leases may contain provisions setting out a fixed ground rent of say £50 per annum throughout the term of the lease whereas other leases may contain provisions for an escalating ground rent, for example commencing at £100 per annum and being reviewed every 10 years. The lease will specify the rent reviews and the mechanism by which the ground rent will be reviewed.

Peppercorn, aka effectively zero, ground rent for most new leases

The Leasehold Reform (Ground Rent) Act 2022, which we shall refer to within this article as the Act, comes into force on 30 June 2022 for leasehold properties (excluding retirement properties). Once the Act comes into force, most new leases will include a ground rent of not more than one peppercorn per annum. This means that there if effectively a zero ground rent for properties regulated by the Act, which is good news for leaseholders!

The Act is not retrospective and so will not apply to existing leases. If you are a leaseholder and paying ground rent then you will continue to do so. Existing leaseholders who decide to voluntarily extend their lease will be granted a lease extension with a peppercorn ground rent. This may be a consideration for leaseholders who currently pay ground rent under the existing terms of their lease and who wish to reduce the level of ground rent to a peppercorn.

There are exceptions to the Act which include (a) retirement properties (until 2023), (b) applicable community-led housing, (c) certain financial products and (d) business leases which are defined by the Act.

Landlords will need to bear in mind that from 30 June 2022 fines of up to £30,000 can be imposed where applicable leases are granted with a ground rent in contravention of the Act.

Consider the future and make a will!

We would also remind you it is important for any individual to consider the future and make a will. Wills often form a critical part of inheritance tax (otherwise known as ‘IHT’) and estate planning structures for you and your family. Even if you feel that you do not have a lot of assets, you must remember a property is one of the main assets you will acquire and simple wills can be drafted to keep your assets safe. At Lester Aldridge we are able to assist with your leasehold questions whether they relate to residential and/or commercial properties and your wills and estate planning.

Please feel free to contact us for a free no-obligation quotation on 01202 702682 or email us on This email address is being protected from spambots. You need JavaScript enabled to view it..

Stephanie Adams, Partner


Stephanie Adams solicitor with Lester Aldridge


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