What is Ground Rent and Why is it Important?
Updated: Sep 17
What is Ground Rent?
Ground rent is a form of leasehold payment that is paid by the leaseholder to the freeholder of a property. It is a payment made annually or biannually, and is usually a small amount of money. Ground rent is a common feature in leasehold properties in England and Wales and is typically included in the lease agreement between the leaseholder and the freeholder.
How Does Ground Rent Work?
Ground rent is usually paid annually or biannually to the freeholder of a property. The amount of ground rent payable is usually set out in the lease agreement and is typically a fixed amount. The ground rent payment can increase over time, as the lease agreement may include a rent review clause. This means that the ground rent payment can increase after a certain period of time has passed.
Why is Ground Rent Important?
Ground rent is an important aspect of leasehold property ownership because it represents a legal obligation on the part of the leaseholder to pay the freeholder. Failure to pay ground rent can result in legal action being taken against the leaseholder, and may result in the lease being forfeited.
Ground rent can also affect the value of a property. Some lease agreements include provisions that allow the freeholder to increase the ground rent payment by a significant amount after a certain period of time has passed. This can make the property less attractive to potential buyers, as they may be put off by the prospect of having to pay a significant amount of ground rent in the future.
Can Ground Rent Be Bought Out?
In some cases, it may be possible for a leaseholder to buy out the ground rent. This is known as enfranchisement and involves the leaseholder buying the freehold of the property from the freeholder. The cost of enfranchisement can vary depending on a number of factors, including the length of the lease and the value of the property.
In summary, ground rent is an important aspect of leasehold property ownership in England and Wales. It represents a legal obligation on the part of the leaseholder to pay the freeholder, and failure to pay ground rent can have serious consequences. If you have any questions about ground rent, be sure to consult a legal professional or speak to the freeholder of your property.
If you are unsure who your freeholder is or want more information about your leasehold interest, at Land Registry Online, we offer a Title Register service that allows you to easily obtain this information. Simply select the desired documents, complete your details, and you will receive your documents by email within a few hours.
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