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Onerous Ground Rent for Residential Property - Your Options

What is Ground Rent?

Ground rent is a type of rent paid to the owner of the land that your property is on. It will be familiar to people who own flats but is less common where houses are concerned, as houses are usually owned on a freehold basis. However, in recent years some new build residential homes have been sold on a leasehold basis, meaning you don’t own the land that the property is on and must account to a landlord.

Onerous Charges

Historically ground rent has been a nominal or ‘peppercorn’ amount. However, to their surprise, owners of new build residential homes have been discovering onerous clauses within their leases whereby the amount of ground rent payable increases considerably over time, often doubling every 10 years or similar. So, a charge that might appear small or reasonable at the time the property is purchased can grow exponentially. This ‘ground rent scandal’ has been making the headlines for some time and is something that anyone considering buying a new build property, or who has recently bought one, should be aware of. 


Onerous clauses in respect of ground rent could cause various issues with the property in the future including:

  1. Affordability - if there are considerable increases in the ground rent during the course of a lease you could potentially have difficulty paying, especially where it is an unexpected cost that you have not budgeted for.

  2. Getting a mortgage – Some providers will not lend in respect of a property which is subject to a lease containing onerous clauses. You could therefore find it difficult to obtain a mortgage on the property.

  3. The value of the property – If the ground rent on a property with a long lease significantly increases every few years, that increasing cost will eat away at the value of the property itself and, at some point, the property could even become worthless.

  4. The saleability of the property – Future buyers may be put off by the existence of these types of clauses, causing problems if you try to sell the property.

What can you do?

You can seek to resolve the matter with the landlord. Ideally this should be done before you purchase the property but, if necessary, afterwards. The landlord might be open to you either: (i) buying the freehold; or (ii) negotiating the terms of the lease.

Some landlords may well be keen to help, especially where they are high profile developers who want to avoid negative publicity. For example, Taylor Wimpey last year set up a £130m redress scheme in response to the scandal, and others may follow suit. However, if the developer or original owner has sold the lease on to a third-party, who has less interest in the bad press and more interest in making a profit, it might not be as simple.

Professional Negligence

Often these onerous clauses are deep within the small print of contracts and may not be picked up by a lay person. Individuals are reliant on their conveyancing solicitors to flag these clauses and advise them accordingly, so they can make informed decisions about how, and whether, to proceed with the purchase. If your conveyancing solicitor didn’t point out the clause or advise you about it then you might have grounds for a professional negligence claim.

To succeed in a claim against your solicitor you would need to show that the solicitor’s failure to advise was in breach of their duty to you and caused you to suffer loss. Such loss might be, for example, the difference between the value of the property with the onerous clause in the lease, and without it (or with a normal/reasonable clause). Expert evidence from a valuation surveyor would likely be required to establish what this difference in value might be.

You only have a limited time to bring this sort of claim – usually 6 years from when the loss was suffered, so when contracts were exchanged. If you own a leasehold property it is advisable to check your lease straight away because if the issue is only discovered later down the line, at the point the rent increases or when you come to try to sell the property, it might be too late to seek redress.  

At the end of last year the government announced plans to ban leaseholds for almost all new homes, as part of its measures for tackling unfair practices in the leasehold sector. Plans have also been announced by the Law Commission to help existing leasehold homeowners buy the freehold of their houses. However, many people continue to be effected.

We have considerable experience in helping victims of professional negligence recover their losses. If you think you might be affected, please contact Sarah Holland for a no obligation discussion on 0117 959 5438 or at sholland@loneystewartholland.co.uk.