We take a look at ground rent, why it needs to be paid and how you can get rid of it. We’ll aim to answer all the most frequently-asked questions on ground rent and some related topics around owning a leasehold property.
What is ground rent?
Ground rent is a regular payment to the freeholder that you’ll need to make if you own a leasehold property. This is because the freeholder owns the land and you pay them to ‘lease’ the land that your property is on.
Who pays ground rent?
The leaseholder normally pays ground rent to the freeholder, or sometimes to a superior leaseholder. The terms of your lease should say when, and how much, the payments should be. It will also say how often it can be increased, and by how much.
What is a typical ground rent?
A typical ground rent is usually up to £400 per year, but can be more, depending on the terms of your lease. You need to read the terms of your lease very carefully, as some unscrupulous freeholders may increase ground rents regularly and by large amounts.
How do I get rid of ground rent?
If you’re a home owner in Wales or England you cannot buy out your ground rent. However, you may be able to gain a share of the freehold. To do this, you and at least half of the other leaseholders would need to buy the freehold of the building.
We look at the benefits and drawbacks of doing this in our article What does share of freehold mean?
What happens if I don’t pay it?
If you don’t pay your ground rent the freeholder can take legal action against you. They can get a court order that will allow them to recover the money you owe them. They can also regain possession of the property from you by bringing what’s called a forfeiture action. However, they can only do this once you have owed them ground rent for at least three years and owe them at least £350.
Will ground rent be abolished?
Government advisers yesterday (21st July, 2020) released recommendations to radically reform the rules around leasehold properties. The proposals would make it much easier for leaseholders to extend their lease, buy the freehold and eliminate ground rents.
Can a landlord increase my ground rent?
A landlord can only increase your ground rent if the terms of that increase are set out in your lease. For example, some leases state that the ground rent will increase according to the rental value of the property. Or, it may increase by a fixed amount at certain times.
How often do you have to pay it?
Ground rent is normally paid annually. However, it may also be paid biannually (every six months) or quarterly (every three months). This will be stated in the terms of the lease.
What is the ground rent scandal?
The leasehold and ground rents scandal refers to the way that some freeholders in recent years have included unfair ground rent charges in their lease terms. This allowed them to increase ground rent so much that leaseholders could no longer afford it and struggled to sell their properties.
Find answers to more of your property-related questions in our HomeViews Guides articles.
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