Niki Adkins, Associate in our Leasehold Property Team, looks at ground rent; giving an overview of what it is, what it does and why increases are such an issue for leaseholders.
What is ground rent?
Ground rents are regular payments that a flat owner (leaseholder) is required to pay to their freeholder for living in the property (a rent, essentially). Such a ground rent is detailed in the flat’s lease.
Ground rent can be paid annually or in instalments (usually half-yearly), and failure to pay can result in the freeholder seeking to obtain possession of the flat.
What does ground rent pay for?
Whatever the freeholder chooses! The ground rent is the freeholder’s annual ‘profit’ for owning the freehold of the building.
A ‘ground rent’ shouldn’t be confused with a ‘service charge’ which is what flat owners pay to the freeholder by way of reimbursement of the costs associated with the building, like buildings insurance and maintenance.
Can my freeholder increase ground rent?
If your lease expressly includes a provision for your ground rent to increase; yes. However, if your ground rent is fixed at a certain level, your freeholder cannot increase your ground rent without your agreement.
How often does ground rent increase?
The timing of any increases in your ground rent will be expressly stated in your lease.
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