I don’t like many of the answers on many agents’ web pages and will try my own explanation. You have bought a flat which is like owning a drawer in a chest of drawers. In order for the landlord to look after the chest, you pay a contribution towards those costs. Otherwise you are left with a pile of jumpers and an old girlfriend’s bra.
Ground rents are simply an anachronism in that a leasehold property must be subject to a rent. While it was fashionable for a time to grant peppercorn rents, in the past and in more recent times, rents are a popular source of investment and have increased significantly.
It is the landlord’s money and nothing to do with common expenses, and it is charged, fair or not, “because they can”. Flat buyers are therefore warned to check ground rents, and, in newer build, there are some very punishing reviews which increase rent even more.
When it comes to extending a lease this can have a significant affect on the price of the extension.
As with ground rent insurance rent has gome in and out of fashion and allows for the invoicing and recovery of insurance outside of the normal service charge timing and billing.
It is particularly useful where there is a superior landlord or freeholder, and the management of the building is vested in a party to the lease manager (often resident owned or a named agent), or there is an intervening head lease.
Flat and home owners must be diligent- very often standing orders only cover the service charge and these one off bills must be checked and paid separately.
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