If you own a lease or even some houses, by way of a long lease or virtual freehold you are probably required to pay something to the landlord. This payment is sometimes split into three chunks, namely (i) the ground rent, (ii) the insurance premium and (iii) money towards maintenance. Failure to pay any one of these charges can, eventually, lead to serious consequences including the loss of your leasehold interest!

Payments made to the landlord, his managing agent and/or the building’s maintenance fund are set either in the lease or through a mechanism set out in the lease. The ground rent is usually fairly low, perhaps £50 per annum. In many instances, this ground rent may never be demanded or it may be inconsequential.

It’s not unusual for a long lease to have a rent payable equivalent to just one peppercorn! This is merely there to illustrate that something is paid in rent, which is required for a lease to exist. In such cases, the rent (or consideration) is known as a peppercorn rent and will not be demanded by the landlord.

Peppercorn rents are common where long leases exist. They should not be confused with more significant ground rents or sinking funds and insurance rents.

Related articles:

Your home may be repossessed if you do not keep up repayments on your mortgage.

There will be no fee for Mortgage Advice. There may be a fee for arranging a mortgage. The precise amount will depend upon your circumstances, but we estimate it to be £399.

Mortgage Required Ltd, Finance House, 5 Bath Road, Maidenhead, SL6 4AQ is authorised and regulated by the Financial Conduct Authority reference 573718 at www.fca.org.uk.

The Financial Ombudsman Service is an agency for arbitrating on unresolved complaints between regulated firms and their clients. More detail can be found on their website: www.financial-ombudsman.org.uk