zero ground rent

londonftbhelp

Hello all,

I intend to place an offer for a one bedroom ground floor flat in London. The estate agent has advised that the ground rent is zero. This seems unusual to me - can anybody explain why this might be, and if it might cause any issues? The freeholder is hexagon.

Thanks

user1977

More likely to be some sort of notional rent than actually zero (e.g. "a peppercorn", or "£1 if asked") because technically if there's absolutely no rent then it isn't a lease, but there's no particular reason why there ought to be a significant rent worth collecting. Pretty commonplace for it to be a peppercorn rent or so low that nobody can be bothered invoicing for it.

eddddy

Is it a new lease? The Leasehold Reform (Ground Rent) Act 2022 says that all new leases for homes must have a ground rent of zero (a peppercorn). The law doesn't come into force until later this year, but many landlords are already setting ground rents at zero.

If it's an existing lease - it may be that a previous owner has done a statutory lease extension. That reduces the ground rend to zero (a peppercorn).

It won't cause any issues for you.

Slithery

londonftbhelp said:
The estate agent has advised that the ground rent is zero. This seems unusual to me - can anybody explain why this might be, and if it might cause any issues?

EA's can't be relied on for legal information (although their code of practice says that they should provide correct info).
If the ground rent was zero then a lease couldn't legally exist. Do they perhaps mean that the current owner hasn't ever been asked to pay anything which is perfectly possible if it's for a peppercorn or a tiny amount as it would cost more for the freeholder to collect than the amount they'd get?

Slithery

eddddy said:

The Leasehold Reform (Ground Rent) Act 2022 says that all new leases for homes must have a ground rent of zero (a peppercorn)....

That reduces the ground rend to zero (a peppercorn).

A peppercorn rent isn't zero. It's a literal peppercorn...
https://www.tesco.com/groceries/en-GB/products/301971870

The freeholder is perfectly within their rights to claim one from the leaseholder every year.

user1977

Slithery said:

eddddy said:

The Leasehold Reform (Ground Rent) Act 2022 says that all new leases for homes must have a ground rent of zero (a peppercorn)....

That reduces the ground rend to zero (a peppercorn).

A peppercorn rent isn't zero. It's a literal peppercorn...
https://www.tesco.com/groceries/en-GB/products/301971870

The freeholder is perfectly within their rights to claim one from the leaseholder every year.

Currently unavailable - maybe there's been a run on freeholders demanding their dues...

Slithery

user1977 said:

Slithery said:

eddddy said:

The Leasehold Reform (Ground Rent) Act 2022 says that all new leases for homes must have a ground rent of zero (a peppercorn)....

That reduces the ground rend to zero (a peppercorn).

A peppercorn rent isn't zero. It's a literal peppercorn...
https://www.tesco.com/groceries/en-GB/products/301971870

The freeholder is perfectly within their rights to claim one from the leaseholder every year.

Currently unavailable - maybe there's been a run on freeholders demanding their dues...

Any sensible leaseholder would have stocked up on 250 years worth during the purchase process

ABFG

Just be careful  - ground rent and service charge are separate and in my recent experience some EAs sometimes are a bit 'willfully vague' in their materials. As in, they will tell you loud and clear that there is peppercorn (no) ground rent while not mentioning the £X000s of service charge pa.

TL;DR - make sure you know the service charge too.

bouicca21

I would not believe anything an EA says until I’d seen the lease.

londonftbhelp

Thanks all for your comments. Estate Agent has since rung to clarify, they initially misquoted the service charge and ground rent and have now provided a new, combined figure.

newdriver101

londonftbhelp said:

Thanks all for your comments. Estate Agent has since rung to clarify, they initially misquoted the service charge and ground rent and have now provided a new, combined figure.

Why are they giving you a "combined" figure? the GR and SC are 2 separate charges and should be listed separately.