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England's ground rent rule explained: most new long leases of flats since 30 June 2022 are capped at a peppercorn, with fines of £500 to £30,000

The GOV.UK guidance says long leases of over 21 years have often required the leaseholder to pay a yearly ground rent to the landlord, often hundreds of pounds a year. The Leasehold Reform (Ground Rent) Act 2022 ended that for most new leases. This guide explains, from the official GOV.UK guidance, which leases the rule covers, the exceptions, and what a buyer from Kuwait should check before signing.

Al Mithaq news desk · Published · Source: GOV.UK
New riverside blocks of flats at Royal Wharf, east London, seen across the River Thames on a clear afternoon: a grey building and a copper-red building with glass balconies above the river wall
New riverside blocks of flats at Royal Wharf, east London, seen across the River Thames on a clear afternoon: a grey building and a copper-red building with glass balconies above the river wall. Picture: The wub, Wikimedia Commons, CC BY-SA 4.0, 2023
30 June 2022start date for most new long leases
1 peppercornthe most ground rent a regulated new lease may charge each year
£30,000highest fine for a landlord who breaks the rule

What the Act changed

The Leasehold Reform (Ground Rent) Act 2022 limits the ground rent on new regulated leases to a peppercorn. The Act defines a peppercorn rent as an annual rent of one peppercorn, which in effect means a ground rent with no money value, and the guidance says landlords are not obliged to ask for even that. The Act came into force for most new regulated leases on 30 June 2022, and for leases of retirement homes on 1 April 2023.

Which leases it covers, and the exceptions

A lease is generally regulated when it is granted on or after the start date, is a long lease of more than 21 years of a single dwelling, is granted for a premium, and is not an excepted lease. The limit does not apply where contracts were exchanged before the start date, even if the lease was granted later, or to business leases, community-led housing and certain financial products. On a voluntary lease extension, the added years must carry a peppercorn, while the rest of the original term may keep its existing ground rent, but not more than the original amount. Statutory lease extensions of flats must already be at a peppercorn. On shared ownership leases, the peppercorn limit applies to the leaseholder's share.

Refunds, fines and who enforces

A landlord who receives a prohibited ground rent must refund it within 28 days of the payment, and managing agents must also refund amounts collected wrongly. Fines run from £500 to £30,000 at the enforcement authority's discretion and apply to landlords, not to managing agents acting for them. Enforcement is the duty of local weights and measures authorities, known as Trading Standards; district councils in England may also enforce but are not required to. Leaseholders can apply to the First-tier Tribunal (Property Chamber) for a recovery order, or for a declaration on whether a lease contains a prohibited ground rent term.

What the government plans next

This 2022 rule covers new leases only. In the draft Commonhold and Leasehold Reform Bill, first published on 27 January 2026, the government says it is legislating to cap ground rents in residential leases at £250 a year, changing to a peppercorn after 40 years, and its published plans include banning the use of leasehold for most new flats. These are proposals, not yet law; a consultation on possible exemptions to the cap closed on 27 August 2026 and the government is analysing the feedback.

Why it mattersOur view for a buyer from Kuwait: When you buy a flat in London, you usually buy a long lease, so read the ground rent clause as carefully as the price. On a regulated lease granted from 30 June 2022, the ground rent should be a peppercorn, in practice nothing to pay. On an older lease, or one whose contracts were exchanged before that date, a yearly ground rent may still apply, and you should ask your solicitor how much it is and whether it can rise; the government's proposed cap of £250 a year is not yet law. The rule covers ground rent only, so budget separately for the building's service charge. If you pay a ground rent that the Act does not allow, the GOV.UK guidance says the landlord must refund it within 28 days of the payment, and Trading Standards can fine the landlord.

What Al Mithaq adds

Our London page shows homes in London and nearby that buyers from Kuwait can view with our team. For any home you like, we can send the details the developer gives on tenure, lease length, ground rent and the estimated service charge, so that you and your solicitor can check them before you reserve.

Sources

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