Peppercorn Rent meaning

During any due diligence on acquiring a leasehold interest in land, it is vital to review whether the tenant may assign, underlet, or charge the premises. Provisions that are too restrictive may: adversely affect the buyer’s ability to dispose of their interest in the property in the future create a burden for day-to-day property management impact the overall value of the property to the buyer This Checklist is directed chiefly at leases granted for a reasonably long term at an annual market rent. For further guidance on: building leases, see Practice Note: Building leases—alienation side-by-side or geared rent leases, see Practice Note: Headlease rent linked to underlease rents long leases granted for a premium at a peppercorn rent where the leasehold interest is virtually equivalent to a freehold interest, see Precedent: Long lease of whole of commercial premises at a premium Assignment Can the tenant assign the lease and is the landlord’s consent...

Original news Parkes v Wilkes [2017] EWHC 1556 (Ch) The claimant and the defendant were each leaseholders of separate flats in the same building. By collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993, they acquired the freehold from Regis Group Ltd. At the same time, they executed a trust deed over the freehold, naming themselves as the two trustees and the sole beneficiaries. The deed was straightforward, stating that they held the property on trust for one another as tenants in common in equal shares. Seven years later, the claimant asked the defendant to agree a 999-year extension of her lease at a peppercorn rent. No agreement followed. The claimant then sought, but failed to obtain, an order under the Trusts of Land and Appointment of Trustees Act 1996 to grant a 999-year lease of her flat for no premium, and she appealed to the Court of Appeal. As for practical consequences, the outcome confirms that the court enjoys a broad discretion under...

Original news Trustees of the Alice Ellen Cooper-Dean Charitable Foundation v Greensleeves Owners Limited [2015] UKUT 0320 (LC). The UT affirmed the Leasehold Valuation Tribunal (LVT) decision that a ‘two-stage’ enfranchisement resulted in no payment being due to the freeholder. What were the facts? The position can be broken down into three stages. Stage one The property was split into eight residential flats. Each flat lease provided for an initial ground rent of £300, with a review scheduled for late 2015. At the same time, a headlease was granted to a third party management company unconnected with the landlord. Under that headlease, the freeholder’s initial ground rent was £2,400, also subject to review in late 2015. Stage two In 2011, six of the flat tenants sought and obtained lease extensions under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993). As a consequence, the ground rent payable to the management company under each of those six leases was reduced from £300...

In this issue: Key developments and horizon scanning Enforcing security and property insolvency Contractual issues Disputes and remedies LexTalk®Property Disputes: a Lexis®Nexis community Additional Property disputes updates Daily and weekly news alerts New and updated content Trackers Latest Q&As Key developments and horizon scanning Leasehold and Freehold Reform Act 2024 This Act stops the granting or assignment of certain new long residential house leases; reshapes the rights of long-lease tenants to purchase the freehold of their houses, to extend the leases of their houses or flats, and to act collectively to enfranchise or manage buildings containing their flats; gives such tenants the right to reduce rent under their leases to a peppercorn; and regulates residential landlord–tenant relationships, estate management and rentcharges. It also amends the Building Safety Act 2022 in relation to fixing building defects and the insolvency of those with repairing duties for specified buildings. It commenced in part on 24 May...

Ground rent ‘Ground rent’ typically describes a modest or nominal sum payable under a long lease that has been granted for a premium. Ground rent is payable by the tenant to the landlord (most often yearly or bi-annually). It is distinct from a service charge and is not meant to reimburse the landlord for expenditure. Properties that can attract ground rent include houses and flats, as well as commercial land and buildings. From 30 June 2022, the Leasehold Reform (Ground Rent) Act 2022 (LR(GR)A 2022) limits the level of ground rent a landlord of an individual dwelling may lawfully charge a tenant under a ‘regulated lease’ (as defined in LR(GR)A 2022, s 1) (a Regulated Lease)—see: What is a ‘regulated lease’? For a Regulated Lease, ground rent is regarded as capped at the specified lawful ‘permitted rent’ (whether or not the lease purports to reserve a higher sum). In most Regulated Leases, the lawful ‘permitted rent’ is an annual ground rent of one peppercorn. The ‘permitted rent’ can be...

This Practice Note outlines the statutory entitlement (subject to statutory qualifying criteria) of a tenant holding a long lease of a flat to acquire a 90-year extension of that lease under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993). It includes guidance on valuation and the assessment of the premium; procedure, including service of a section 42 notice and a section 45 counter-notice; the position of intermediate landlords; registration; assignment; initial deposit; consequences of non-compliance; terms of the new lease; First-tier Tribunal (FTT) (or Leasehold Valuation Tribunal (LVT) in Wales) and County Court procedure; payment of the premium; completion; and withdrawal of claim. For a table setting out common statutory time limits in the lease extension procedure, see Practice Note: Quick guide to time limits for lease extensions under the Leasehold Reform, Housing and Urban Development Act 1993. The right to an extended lease A tenant with a long lease of a flat has a statutory right (subject to meeting the statutory qualifying criteria)...

This Practice Note summarises the provisions of the Leasehold and Freehold Reform Act 2024 (LFRA 2024), much of which is not yet in force. bans the grant or assignment of certain long residential house leases makes major changes to multiple aspects of leasehold enfranchisement and lease extension procedures and provisions (including the price payable) gives long leaseholders a right to replace their ground rent with a peppercorn rent on payment of a premium brings in a set of reforms to the residential service charge regime, regulation of estate management, and leasehold and estate management redress schemes clarifies uses of estate rentcharges and regulates remedies for rentcharge arrears amends various provisions of the Building Safety Act 2022 (BSA 2022), including defining ‘relevant steps’ a landlord must take to remedy ‘relevant defects’ Commencement LFRA 2024 is coming into force in phases. Check each section below to see whether provisions are in force, and from what date(s)...

Section 57(1) of the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) Provides that the terms of any new lease must be conferred in line with LRHUDA 1993, s 56(1) as regards rent (a peppercorn) and the term (90 years after the existing lease’s term date), and, save for appropriate specified amendments, should otherwise reflect the provisions of the current lease. In addition, LRHUDA 1993, s 57(6) confirms that LRHUDA 1993, s 57(1) does not prevent the landlord and the tenant, in defined specified circumstances, from settling terms for the new lease which are not in accordance with the existing lease, in those specified circumstances. This applies in certain specified cases only...

Where a tenant makes an encroachment onto neighbouring land owned by a third party adjacent to the demised land, the appropriation is treated as accruing to the benefit of the tenant’s landlord. In Tower Hamlets LBC v Barrett [2006] P&CR 132 (not reported by LexisNexis®), Neuberger LJ observed at para [26] that the doctrine is clearly articulated in these terms: in every case—whether the enclosed land is part of the waste, belongs to the landlord, or is owned by someone else—the presumption is that the tenant enclosed it for the landlord’s advantage, unless the tenant has carried out some act disclaiming the landlord’s title...

Mary Ashley of 15 Old Square Higher SDLT rates apply where an individual buys a major interest in a single dwelling if conditions A–D are met at day‑end: A — consideration of £40,000 or more B — not subject to a lease with over 21 years unexpired C — purchaser owns another £40,000+ dwelling not so leased D — does not replace the only or main residence Dwelling includes a building or part used, suitable or being built/adapted as one dwelling, its gardens, grounds and benefiting land, and off‑plan contracts. Mixed‑use is excluded; no apportionment. As this freehold includes residential and non‑residential parts, it is mixed‑use, so the 3% surcharge should not arise. Sean Randall of Blick Rothenberg Limited The 3% applies to “higher rates transactions” in FA 2003, Sch 4ZA, paras 3–7, each requiring the main subject‑matter to consist of a major interest in at least one dwelling. The chargeable interest includes the first‑floor flat but does...