If you’re exploring leasehold properties for sale, you’re likely to come across terms like ground rent, service charge, and peppercorn rent. While these phrases might seem confusing at first, they can have a significant impact on your property ownership journey, especially as leasehold reform continues to unfold.
This guide breaks down what ground rent means, the concept of peppercorn ground rent, and what buyers and sellers need to know under current and upcoming UK regulations.
What is ground rent?
Ground rent is a payment made by the leaseholder, the person who owns the flat or house, to the freeholder, the person or organisation who owns the land the building sits on. It’s typically a fixed annual charge set out in your lease.
What does ground rent cover?
This is a common point of confusion. Ground rent doesn’t pay for property upkeep or communal services. Those are covered under separate leasehold service charges. Ground rent is simply a fee for the continued use of the land, even though you’ve bought the property that sits on it.
Over the years, many leaseholders have questioned the fairness of paying ground rent, particularly when it doesn’t come with any clear benefit.
What is peppercorn ground rent?
You might’ve seen listings or lease agreements mention peppercorn rent and wondered what it means. A peppercorn rent is a token amount, usually so small that it’s never actually paid. Legally, it exists just to make sure the lease is valid, but in practice, it means the leaseholder pays no meaningful ground rent.
Implications for leasehold property owners
If you already own a leasehold home with a traditional ground rent clause, the law doesn’t automatically change your terms. That means:
- You may still be liable for increasing ground rent
- You won’t benefit from peppercorn ground rent unless you extend your lease under new terms
- Escalating rent clauses can still affect your ability to remortgage or sell
Related: Leasehold vs Freehold: What’s the difference and why it matters
Why it matters
More buyers are asking about ground rent when viewing properties. Some are put off by clauses where ground rent doubles every 10 or 20 years.
If you’re thinking of selling leasehold property, this is something to watch. Buyers and lenders may hesitate if the lease terms include rising ground rent, especially when peppercorn leases are now more common on the market.
Impact on property sales
From a seller’s perspective, ground rent can influence how quickly your property sells and how attractive it is to buyers.
Buying a peppercorn lease
Properties with peppercorn ground rent are typically more appealing to buyers. Rightmove reports in 2025 show increased demand for flats with zero ground rent, as buyers try to avoid unexpected future costs.
Selling leasehold property with ground rent
If your lease includes high or rising ground rent, you might consider negotiating an extension or variation. Doing so could:
- Increase your property’s value
- Open up more lending options for buyers
- Make your home more competitive against newer listings
Ground rent vs service charge, what’s the difference?
Let’s clear up a frequent question, is ground rent the same as service charge?
Not at all. Here’s how they differ:
Ground rent:
- A fixed charge for the land
- Doesn’t cover any service
- Often legally required, but now commonly set at peppercorn
Service charge:
- Covers property maintenance fees like lift servicing, cleaning communal areas, and insurance
- Varies based on yearly maintenance costs
- Paid in addition to ground rent unless your lease is freehold
Understanding the difference helps when budgeting or comparing properties. You’ll still pay leasehold service charges, even if your ground rent is peppercorn.
Understanding what matters before you buy or sell
That’s why it’s so important to read your lease carefully, ask the right questions, and stay informed about the leasehold reforms currently in progress. While changes like peppercorn ground rent are helping to make leasehold ownership more transparent and fairer, many of the biggest shifts are still on the horizon.
Whether you’re buying a flat with peppercorn rent, reviewing an older lease, or preparing to sell a leasehold property, being aware of how ground rent and service charges work will help you make smarter, more confident decisions. When you’re ready to take that next step, your Whitegates local branch is here to help you navigate it.
