Ground rent

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Ground rent is the regular payment a leaseholder makes to the landowner (the freeholder) for the land the property sits on. You may own the building, but not the land itself. Leases are long, often 99 years or more, sometimes many hundreds of years, and the ground rent is paid for that land during the lease.

Why ground rent exists
When long leases were first created, landowners charged leaseholders to use the land. Over time, people worried that leases could end and homes could revert to the landowner, so reforms were introduced to give leaseholders more security and to limit or change how ground rent works.

In the UK
- Long leases let you live in or rent out a property for many years, with ground rent paid to the landowner.
- Legislation in the past gave leaseholders more rights to extend their leases.
- Rules now govern how ground rents are charged and how notices are served.
- Most new longer leases have little or no ground rent. The Leasehold Reform (Ground Rent) Act 2022 mostly bans ground rents higher than a peppercorn (essentially zero) on new leases.

Around the world
- The Netherlands still uses ground leases in many places, but some cities offer options to convert to direct land ownership or to permanent ground leases.
- In the United States, ground rents have existed in some states, with different rules in different places (examples and changes vary by state).

What this means for leaseholders
- Ground rent affects the ongoing cost of owning a leasehold and can influence a mortgage or resale value, especially if the rent can go up over time.
- Always read your lease to check the ground rent amount, how long the lease lasts, and any terms that let the rent rise.
- If you want to extend your lease or buy the land, there are legal processes and protections that can help.

In short, ground rent is land “ownership” tied to a long lease. It has been controversial, but many places are reforming it to be fairer and more secure for leaseholders, especially for new leases.