Ground rent

Most leaseholders have to pay ground rent to the freeholder as one of the conditions of their lease. There are usually rules about how it is paid, when it can be increased and what could happen if you don't pay it.

If your freeholder has threatened to evict you or your ground rent has been increased unfairly, use the Legal Adviser Finder to find a solicitor or legal adviser in your area, or contact the Leasehold Advisory Service 

What is ground rent?

Ground rent is a fee you have to pay to the freeholder as a condition of your lease. It is usually a small amount (such as £100 or £200 a year).

Some leaseholders don't have to pay any money at all in ground rent but most leases will still mention it. This is sometimes called a 'peppercorn rent'.

Information about how to pay your ground rent should be included in your lease. Check to see what it says about:

  • the amount of ground rent you have to pay
  • when it has to be paid (usually once a year)
  • who it should be paid to (this could be the freeholder or a managing agent).

When do you have to pay the ground rent?

You are not legally liable to pay the ground rent unless the freeholder has formally demanded it. The demand will normally be posted or delivered to you at the address of the house or flat, unless you have already asked the freeholder to send ground rent demands to an alternative address.

The demand must be written and must include certain information to be valid:

  • your name
  • the period that the demand covers
  • how much you have to pay
  • the name and address of the freeholder (and, if you are to make payments to a managing agent, their name and address)
  • the date on which ground rent is due (or, if the demand is sent after the due date that's specified in your lease, the date on which you should have paid it).

The exact wording of the demand is set out in regulations - an adviser may be able to check whether any demands you receive comply.

The demand must be sent with 'Notes for Leaseholders', which inform you of your rights and responsibilities.

The due date specified in the formal demand cannot fall before the ground rent would have been due under the lease. It should be at least 30 days (and no more than 60) after you receive the demand.

You are not necessarily entitled to a receipt, so always keep proof of payment (such as receipts or bank statements).

What happens if you don't pay ground rent?

The freeholder cannot take any legal action against you for ground rent arrears unless s/he has already:

  • sent a formal demand in the correct format (see above)
  • given the correct amount of notice (30 to 60 days), and
  • you have not responded by the due date.

If you don't pay your ground rent the freeholder can take you to court. It is most likely that s/he will try to recover the arrears through the small claims court.

In theory, the freeholder could take forfeiture action against you, which could ultimately lead to you losing your home. Forfeiture is similar to repossession but it is extremely rare. 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)
  • you have been in arrears for three years or more.

If the freeholder does start forfeiture proceedings, special legal procedures must be followed. If they're not, the freeholder may be guilty of an illegal eviction, which is a criminal offence.

What to do if the freeholder is taking you to court?

If possible, try to pay off what you owe before the court hearing. Otherwise, you will probably have to pay the freeholder's legal costs (and your own) on top of the ground rent. When you pay what you owe, the legal action will automatically stop (this is called 'relief from forfeiture'), and your lease will continue as before.

If you can't afford to pay before the hearing, you will normally be given at least four weeks to do so. If the court orders you to pay and you don't do so in time, the freeholder can ask the bailiffs to evict you. If you are in this situation you may be able to ask the court to delay the eviction but you need to take action quickly. Use our directory to find an adviser in your area who can help you.

Can the ground rent be increased?

The ground rent can normally only be increased if:

  • you sell the property, or
  • you agree to the increase, or
  • the lease says the ground rent can be increased.

Most leases say the ground rent can be increased after a certain number of years. If this is the case, it should also give information about how often this can be done (for example, once every five years) and how much notice the freeholder has to give you. Check to see what your lease says.

Last updated: 1 January 2014