What is ‘a peppercorn ground rent’?

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Lease Law
by Elizabeth Elliott

A ‘peppercorn ground rent’ in a lease simply means “an actual peppercorn” or some other token or nominal rent (for example, a red rose or £1.00) paid by way of consideration in order to form a legally binding lease contract and create a legal relationship between landlord and tenant. Whilst in many leases a peppercorn ground rent may be specified, in practice this is rarely, if ever, collected and thus no rent is payable.

There has been a welcome change to the law regarding the charging of ground rent in most residential long leases. For the new provisions to apply, the long lease must be granted for a premium, for a term of 21 years or more and entered into on or after 30 June 2022. For such leases, the Ground Rent Reform Act 2022 reduces all new ground rents to one literal peppercorn per year from this date, effectively freeing future leaseholders from the previous financial demands for ground rent.

If you would like to discuss a prospective lease extension claim and/or would like to obtain a quote for our fees, please do not hesitate to contact Sajel Patel on sajel@leaselaw.co.uk or 0204 511 9103 or Jade Thomas on jade@leaselaw.co.uk or 0204 511 9100.