Ground Rent in 2026: The History, the Reforms, and What You Now Pay

A Brief History of Ground Rent

Ground rent is a periodic payment made by a leaseholder to the freeholder simply for the right to occupy the land on which the building sits. Historically it was a nominal charge — a "peppercorn" — intended to acknowledge the landlord's ultimate ownership without imposing a meaningful financial burden. Over the past two decades, however, many developers began inserting clauses that caused ground rent to double every ten or fifteen years, or to rise with the Retail Price Index.

By the early 2020s, some leaseholders who had purchased flats in the 2000s and 2010s found themselves paying ground rents of £500, £1,000, or more per year, with contractual provisions that would see those sums escalate to unaffordable levels within their lifetimes. Critically, many mortgage lenders began refusing to lend on properties with onerous ground rent clauses, rendering the flats unmortgageable and effectively unsaleable.

The Leasehold Reform (Ground Rent) Act 2022

The Leasehold Reform (Ground Rent) Act 2022 came into force on 30 June 2022 for new residential leases. It prohibits landlords from charging more than a peppercorn ground rent on any new regulated lease. A peppercorn is legally defined as zero financial value — meaning the obligation exists on paper but no money changes hands.

The Act applies to:

• New long residential leases of a dwelling granted on or after 30 June 2022
• Lease renewals and extensions granted under the statutory regime (Leasehold Reform Act 1967 and Leasehold Reform, Housing and Urban Development Act 1993)
• Retirement housing leases from 1 April 2023

A landlord who charges more than a peppercorn ground rent on a regulated lease commits a criminal offence and can be fined up to £30,000. This is a significant deterrent.

What the Act Does NOT Cover: Existing Leases

The 2022 Act is not retrospective. If your lease was granted before 30 June 2022, your existing ground rent obligations remain legally enforceable. The Act did not cap or abolish ground rent on existing leases — that change would have required a much more complex and potentially compensable legislative intervention.

If you hold a pre-2022 lease with a doubling clause or RPI-linked ground rent, you have two main options:

1. **Negotiate a deed of variation** with your freeholder to cap or eliminate the ground rent, typically for a one-off payment

2. **Extend your lease** under the statutory regime, which by law must be granted with a peppercorn ground rent going forward

The Competition and Markets Authority (CMA) investigated several large developers with onerous ground rent clauses and secured voluntary commitments to remove doubling clauses from a significant number of existing leases. If your freeholder was part of those commitments, you may already benefit from revised terms — check with your solicitor.

The Leasehold and Freehold Reform Act 2024

The 2024 Act built on the 2022 reforms and introduced further protections and transparency requirements. While it did not directly cap ground rent on existing leases, it improved the statutory lease extension process and made it easier and cheaper for leaseholders to extend, thereby allowing more people to escape historic ground rent obligations via the formal statutory route.

Budgeting for Ground Rent

If you own or are buying a leasehold property granted before June 2022, it is essential to understand the ground rent review mechanism in your lease. Our [leasehold cost calculator](/leasehold-cost-calculator) includes a ground rent projection tool that models future escalation based on your lease terms, so you can understand the long-term cost before committing to a purchase.