What Is a Peppercorn Rent? Ground Rent Explained for Leaseholders

The short answer

A peppercorn rent is a token ground rent — historically a single peppercorn — that has no monetary value. In practice it means you pay no ground rent.

The Ground Rent Act 2022

From 30 June 2022, most new long residential leases in England and Wales must have a peppercorn ground rent. Retirement properties followed from 1 April 2023. Existing leases are not automatically changed, so many older flats still carry a cash ground rent.

When ground rent becomes a problem

• Doubling clauses — rent that doubles every 10 or 25 years can become unaffordable.
• Rent above 0.1% of value — many lenders treat this as onerous and refuse to lend.
• Rent over £250 a year (£1,000 in London) — can technically create an assured tenancy, a red flag for lenders.

These issues make a flat hard to sell to a buyer who needs a mortgage.

How to fix an onerous ground rent

• Ask the freeholder for a deed of variation to a fixed or peppercorn rent.
• Use the statutory lease extension route: the extended lease comes with a peppercorn rent.
• Check whether the developer runs a ground rent remediation scheme.

Selling a flat with high ground rent

If you need to move before any of that is resolved, a cash buyer can take the lease as it is. See selling a flat fast and our maisonette guide, or get a free cash offer.