Ground rent explained: what you pay and the £250 cap

Last reviewed 16 June 2026 · Written by Max van der Heiden

Ground rent is an annual payment a leaseholder makes to the freeholder for the land the property sits on. Unlike a service charge, you get nothing in return for it. Ground rent has been banned on most new leases since 2022, older leases still pay it, and the government has proposed capping existing ground rents at £250 a year, though that cap is not yet law.

Ground rent has been one of the most criticised parts of the leasehold system, and the rules around it are changing fast. This guide explains what it is, whether you still have to pay it, and what the proposed cap will and will not do.

What is ground rent?

Ground rent is a payment you make to the freeholder simply for occupying the land your home stands on. It is set out in your lease, and the defining feature is that you receive nothing tangible for it. This is what separates it from a service charge, which at least pays for the upkeep and insurance of the building. Ground rent pays for nothing, which is exactly why it has attracted so much criticism and why the law has moved to phase it out.

Do you still have to pay ground rent?

It depends entirely on when your lease was granted. If your lease was granted on or after 30 June 2022, the Leasehold Reform (Ground Rent) Act 2022 means your ground rent must be a peppercorn, so in practice you pay nothing. For retirement properties the same protection applied a little later, from 1 April 2023.

If your lease was granted before those dates, the 2022 Act did not change your position, and you still pay whatever ground rent your lease requires. That is the situation for millions of existing leaseholders, and it is the group the proposed cap, covered below, is aimed at.

What is a peppercorn ground rent?

A peppercorn rent is a token amount with no real value. The phrase is a historical leftover from when a single peppercorn might literally be handed over to keep a contract technically valid. In modern terms a peppercorn ground rent means zero. When people say new leases have “no ground rent”, this is what they mean, and it is also the end point the reforms are aiming towards for everyone.

What about escalating or doubling ground rent?

Some leases, particularly those granted in the years before the 2022 ban, contain clauses that increase the ground rent over time, sometimes doubling it every ten or fifteen years. These escalating clauses caused real harm. A ground rent that starts modestly can grow into a serious annual cost, and a doubling clause can make a flat very hard to sell or mortgage, because lenders are wary of where the figure ends up.

Following pressure from the competition regulator, many freeholders and developers agreed to remove or soften doubling clauses, so if you have one it is worth checking whether it has already been varied. If your ground rent escalates and it has not been dealt with, it is one of the strongest reasons to consider extending your lease, which removes the ground rent entirely.

The £250 ground rent cap: what is proposed

This is the change most existing leaseholders are watching, so it is worth being precise about what has actually happened, because a lot of what is online overstates it.

In January 2026 the government published a draft Commonhold and Leasehold Reform Bill and a policy statement setting out its intention to cap ground rents on existing leases at £250 a year, reducing to a peppercorn after 40 years. The aim is to deal with the cost and the mortgage and sale problems caused by high ground rents, before ending ground rent altogether.

The important point is that this is a proposal, not the law yet. It still has to pass through Parliament, and the government’s own target for the cap coming into force is around late 2028, although a committee of MPs has suggested it could be brought in a year earlier. When it does take effect it would only immediately change things for leaseholders currently paying more than £250 a year. If your ground rent is already below £250, the cap would not reduce your bill, although the eventual move to a peppercorn would. Until the cap is actually in force, your existing ground rent remains payable. Our leasehold reform tracker keeps the live position on this.

How to get rid of ground rent now

You do not necessarily have to wait years for reform. If you extend your lease through the formal statutory route, your ground rent is reduced to a peppercorn as part of the process. In other words, a lease extension does not just add years, it also wipes out the ground rent on the whole lease. Since the start of 2025 you no longer have to have owned the property for two years before you can do this, so it is available sooner than it used to be. For anyone stuck with an escalating ground rent, this is often the cleanest solution. Our guide to lease extensions explains the cost and the process.

What happens if you do not pay?

Ground rent is a debt you owe under your lease, so it should be paid even though you get nothing for it. That said, there are protections. A freeholder generally cannot take the most serious action over small or recent arrears, and the law also limits demands where the correct notice has not been given. The government has gone further and proposed abolishing forfeiture, the mechanism by which leaseholders could in theory lose their home over relatively small debts, although that change is also still going through. If you are in dispute over ground rent, get advice rather than simply stopping payment, because the rules here are technical and the safest path depends on your exact situation.

Frequently asked questions

Is ground rent the same as a service charge?

No. A service charge pays for maintaining and insuring the building, so you get something for it. Ground rent is paid to the freeholder for the land and buys you nothing. They are separate payments and often appear separately on your bills.

I bought my flat in 2024. Why do I still pay ground rent?

The 2022 ban applies to when the lease was granted, not when you bought the flat. If you bought an older lease that already had a ground rent, you took on that obligation, even though the purchase was recent. The proposed cap is the measure aimed at existing leases like yours.

Will the £250 cap reduce my ground rent automatically?

Not yet, because it is not in force. When it does take effect, it would cap ground rents above £250 a year at that figure. If you already pay less than £250, the cap itself would not change your bill, though the longer-term plan is to move all ground rents to a peppercorn.

Does ground rent affect selling or remortgaging?

It can. A high or escalating ground rent makes some lenders cautious and can put buyers off, which is one of the reasons the government is acting. If this is affecting you, extending the lease to remove the ground rent is worth considering.

What to do next

Start by checking your lease to see what ground rent you are committed to and whether it escalates over time. If it is high or doubling, look at whether a lease extension would remove it, since that works now rather than waiting for reform. Keep an eye on the proposed cap through our reform tracker, but do not assume it will arrive in time to solve a problem you have today. And if you are trying to make sense of leasehold as a whole, our leasehold explained guide ties it all together.

This guide provides general information about ground rent in England and Wales. It is not legal advice, and every lease is different. For advice on your own situation, consult a qualified solicitor or a specialist such as the Leasehold Advisory Service (LEASE). Sources: Leasehold Reform (Ground Rent) Act 2022; draft Commonhold and Leasehold Reform Bill and ground rent policy statement (January 2026); House of Commons Library briefings on the ground rents cap; GOV.UK leasehold guidance. Last reviewed [date]; reviewed whenever the law changes.