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The Leasehold Reform (Ground Rent) Act 2022 makes it illegal to charge a ground rent on any new lease other than that of an actual peppercorn. Why would it allow such a tokenistic practice, rather than simply abolishing ground rents entirely? I don’t think this question as such is speculative or better placed on politics, because the answer may be found in explanatory notes or Hansard rather than the law itself and is thus in any event more likely to be known or found by users here than over there.

But furthermore even if it is not specified, I am not asking about why in the sense of what drove legislators to provide for this, as much as I am asking why in the sense of what legal effect it would have for a lease to be drafted to charge an actual peppercorn for ground rent as allowed in the Act rather than not charging any at all. What other provisions does that circumstance engage, that would make it actually worth including?

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    In essence the question in the body is a duplicate of this question, What is the point of requiring consideration in a contract?law.stackexchange.com/questions/86499/…
    – Lag
    Oct 29 at 16:51
  • @lag I’m not so sure. For example, could there be any effects of the act permitting a ground rent of a peppercorn rather than one of £1 Sterling? Not only that but is there an effect of charging a peppercorn as ground rent rather than simply demanding a one off price of £1 as a consideration for granting the lease?
    – Seeking answers
    Oct 29 at 16:54
  • You asked "Why would it allow such a tokenistic practice, rather than simply abolishing ground rents entirely?" In any case, the Act for the first time defines a peppercorn rent as the annual rent of one peppercorn. It doesn't say the rent is an actual peppercorn.
    – Lag
    Oct 29 at 16:55
  • Well if you are saying that charging a ground rent is synonymous with consideration for any contract in a way that simply charging a price for granting the lease (is this normally just called a purchase price?) then that would seem to be the basis for an answer if it was substantiated. Otherwise it’s unclear how they are actually fully synonymous.
    – Seeking answers
    Oct 29 at 16:57
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    The point of peppercorns is to satisfy the necessity for a consideration in simple contracts at common law. It's a token, nominal or otherwise low amount. The reason for the Act is explained in the Policy Background of the Explanatory Notes linked in the question.
    – Lag
    Oct 29 at 16:58

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'Consideration' is one necessary element of a simple contract at common law. A promise of something of some value to be exchanged for something else of some value. They need not be equal values.

The functions of consideration are explained in answers to this Law.SE question: What is the point of requiring consideration in a contract?

The reason for 'peppercorns' in contract law is to satisfy that consideration element of the contract. In this context peppercorn means a token, nominal or low value.

Instead of upending contract law in this context by ignoring consideration the Act defines (for the first time) a peppercorn rent as the annual rent of one peppercorn. (It doesn't say the ground rent must be an actual peppercorn.)

The Act restricts 'ground rents' on new leases (unless an excepted or non-regulated lease) to a peppercorn rent.

The Act prevents unscrupulous freeholders/landlords for charging whatever they want for ground rent, escalating ground rent or charging for administration of collecting ground rent, with no clear service in return. This is explained in the Policy Background of the Explanatory Notes linked in the question. See also the United Kingdom section of the Wikipedia article about ground rents.

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  • I still don’t understand why a lease (a form of conveyance, so required to be undertaken by deed, rather than contract) requires any consideration at all. And, there is almost always already consideration in the purchase price of the lease. And anyway that practice is still allowed. So what gives?
    – Seeking answers
    Oct 29 at 17:28
  • Incidentally do you mean that this is the first time that any law ever makes provision for a literal peppercorn at least in England and Wales?
    – Seeking answers
    Oct 29 at 17:29

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