Most leaseholders must pay ground rent to the freeholder as a condition of their lease. There are usually rules about how it is paid, when it can be increased and what happens if you don't pay it.
What is ground rent?
Ground rent is a fee you must pay to the freeholder as a condition of your lease.
Ground rent is usually a small amount of around £100 or £200 a year.
Your lease may say that the ground rent will:
- stay the same through the term of the lease, which is commonly 99 years
- increase after a period, often after 33 years
- increase according to a formula
If your lease has been extended, you normally won't have to pay any more ground rent. You may have to pay a peppercorn rent instead.
Paying ground rent
You don't have to pay ground rent until your freeholder sends you a formal Notice of Demand.
The notice must include:
- your name
- the period that the demand covers
- how much you have to pay
- the name and address of the freeholder and their managing agent if payment is made to them
- the date when payment is due
You might not get a receipt from your freeholder so keep proof of payment such as bank statements.
You don't have to pay your ground rent if the freeholder or their agent won't tell you the freeholder's contact details. You do have to pay once you get the details.
Legal action if you don't pay your ground rent
The freeholder can take legal action against you for not paying ground rent.
The freeholder can take you to the small claims court to recover the money you owe.
If you don't pay your ground rent, the freeholder can apply for a court order to get possession of the property. This is called forfeiture action.
The freeholder can only start forfeiture proceedings if you:
- owe £350 or more in ground rent (or a combination of ground rent, services charges and administration charges)
- have been in arrears for three years or more
Any penalty charges that your freeholder has imposed because of your failure to pay the ground rent are excluded from calculating what you owe for this purpose.
If you can't afford to pay what you owe before the hearing, you are normally given at least four weeks to do so. You will probably also have to pay your freeholder’s legal costs.
If you pay what you owe, the legal action automatically stops. This is called relief from forfeiture. Your lease continues as before.
Eviction by bailiffs
The freeholder can ask the bailiffs to evict you if the court orders you to pay and you don't do so in time.
Get advice about forfeiture
Get advice immediately if you are threatened with forfeiture action. You could lose your home if you do not.