Should I buy a flat with ground rent over £250 a year?

A long lease with ground rent above £250 a year (£1,000 in Greater London) could technically be treated as an assured shorthold tenancy, which is why it became known as the ground rent trap. Here's what the rule is, why it worried buyers and lenders, how recent reform has addressed it, and what to check before you buy.

If you are buying a leasehold flat, you may have read that a ground rent over £250 a year can be dangerous. The worry has a real basis in law, and it became known as the ground rent trap. It is worth understanding properly, because the headline sounds far scarier than the practical reality, and the law in this area has recently been reformed.

The short answer

For most buyers, a ground rent over £250 a year is something to check, not something to run from. The concern was a technical quirk in how the law defines a tenancy: in certain circumstances a long residential lease with a high ground rent could fall to be treated as an assured shorthold tenancy, which carried a small theoretical risk to the home. In practice this was a latent risk rather than something freeholders routinely used, it mainly caused mortgage lenders to be cautious, and recent reform has acted to close it off. Ask your conveyancer to confirm the position for the specific lease, and read on so you know what they are checking for.

What the £250 rule actually is

The rule is not a special ground rent law. It comes from the Housing Act 1988, which governs ordinary residential renting (the assured and assured shorthold tenancy regime). Broadly, a tenancy can fall within that regime where:

• the annual rent is more than £250 (or more than £1,000 in Greater London); and
• the property is the tenant's only or principal home.

A long lease (say 99, 125 or 999 years) is obviously not what most people picture when they think of an assured shorthold tenancy. It was never the intended target. But the definition looks at the figures, not at the spirit of the arrangement, so a long lease where the ground rent crept above £250 a year (£1,000 in Greater London) and which the leaseholder lived in as their main home could technically be caught.

Why it became known as a trap

The danger was about enforcement. If a lease were treated as an assured shorthold tenancy, a landlord could in principle rely on Ground 8 of the Housing Act 1988. Ground 8 is a mandatory ground for possession: where the tenant is at least a set period in rent arrears, the court must order possession and has no discretion to refuse.

Compare that with an ordinary long lease. There, if a leaseholder falls behind, the court can grant relief from forfeiture, giving the leaseholder the chance to pay and keep the flat. Under Ground 8 that safety valve is gone. So, in theory, a relatively small ground rent arrears could put the home at risk in a way that ordinary leasehold law would never allow. That mismatch is what people meant by the ground rent trap.

It is important to keep this in proportion. It was a technical risk. Freeholders did not routinely use it, and there is no general pattern of leaseholders losing their homes this way. The bigger practical effect was on mortgages: some lenders became reluctant to lend against leases with ground rents above the threshold, which could make a flat harder to buy, sell or remortgage.

How the law has changed

Because the risk was well recognised, legislation has acted to stop long leases being treated as assured shorthold tenancies in this way, with changes taking effect around late 2025. In short, the trap has been addressed by recent reform rather than left to chance.

We are deliberately not going to give you a definitive statement of exactly how the rules now read for every situation, because this is an area that has moved and the detail matters. What you should take from this is: the ground rent trap was a genuine technical issue, recent reform has moved to fix it, and you should check the current position for the lease in front of you rather than relying on older articles (or on this one) as the last word.

What to check before you buy

Whatever the current legal position, these are sensible things to look at with a leasehold flat. Your conveyancer will do most of this, but it helps to know what is going on.

• Read the ground rent figure in the lease. Find the current annual ground rent and compare it with £250 (£1,000 in Greater London).
• Check whether it rises over time. Many leases have escalating or doubling ground rents. A rent that starts below £250 can cross the threshold later in the term, so look at where it ends up, not just where it starts.
• Ask your conveyancer directly. Ask whether the ground rent raises any assured shorthold tenancy concern and what the current law says about it. This is exactly the kind of point they are there to confirm.
• Consider a deed of variation. A common fix is to reduce the ground rent to a peppercorn (a nominal sum) or to a figure safely below the threshold. The freeholder must agree, and there may be a cost, but it removes the issue cleanly.
• Talk to your mortgage lender. Lenders may have their own requirements about ground rent levels and structure, so a flat that is legally fine could still need to satisfy lender criteria.

If you want the background, our plain-English explainer of what ground rent is covers how these small annual sums work in the first place.

A note on scope: this is general information about a legal issue, not legal or financial advice on your particular purchase. The law in this area has recently changed, so before relying on anything here, take advice from a conveyancer or solicitor who can confirm the current position for the specific lease.