12. Ground rent increase

Ground rent increases refer to adjustments to the amount of ground rent payable by the leaseholder over time. These increases may occur periodically according to the terms outlined in the lease agreement or may be subject to specific conditions or formulas specified in the lease. Understanding ground rent increases is essential for leaseholders to anticipate changes in their housing expenses and plan accordingly. 

Ground rent increase frequencies 

• Fixed increases: Some lease agreements stipulate fixed ground rent increases at predetermined intervals, such as every 10 or 25 years. The leaseholder can anticipate these increases based on the terms outlined in the lease agreement. 
• Index-linked increases: In certain cases, ground rent increases may be linked to an external index, such as the Retail Price Index (RPI) or the Consumer Price Index (CPI). The lease agreement specifies the frequency of index-linked reviews, such as annually or every five years, and the method for calculating the increase based on changes in the chosen index. 
• Percentage increases: Ground rent may increase by a specified percentage at each review period. The lease agreement outlines the percentage increase and the frequency of reviews, allowing leaseholders to predict the amount of the increase based on the original ground rent. 

Calculating ground rent increases 

• Fixed increases: For lease agreements with fixed ground rent increases, the calculation is straightforward. The lease specifies the amount of the increase at each review period, allowing leaseholders to anticipate the new ground rent amount. 
• Index-linked increases: When ground rent increases are linked to an index, the calculation involves comparing the index value at the time of the review with the index value at the start of the lease or the previous review period. The increase is typically calculated as a percentage of the original ground rent based on the change in the index. 
• Percentage increases: In cases where ground rent increases are expressed as a percentage, the calculation involves applying the specified percentage to the current ground rent amount to determine the increase. For example, if the lease stipulates a 5% increase at each review period, the new ground rent amount is calculated by adding 5% of the current ground rent to the existing amount. 

Where to find information about ground rent increases 

• Lease agreement: The lease agreement or lease document provided by the landlord or freeholder specifies the terms and conditions of ground rent increases, including the frequency, method of calculation, and any applicable index or percentage. 
• Rent demand notices: The landlord or freeholder may issue rent demand notices to the leaseholder prior to each ground rent review period, specifying the amount of the increase and the new ground rent payable. These notices provide leaseholders with advance notice of any changes to their ground rent. 
• Contacting the landlord or managing agent: If leaseholders have questions about ground rent increases or require clarification on the terms outlined in the lease agreement, they can contact the landlord, freeholder, or managing agent responsible for property management for assistance.