It’s time to extend the lease of your flat. Or maybe you have just taken over a lease which is about to drop below 80 years. After reading about the benefits of lease extension, you want to go ahead.

The papers and forms to sign are piling up on your desk and you start to worry. All the muddling rents you will have to pay on your lease, what do they mean?

Nominal rent, chief rent, ground rent and even peppercorn rent (!). Thoughts of service charges and panic follow: ‘have I been paying all those rents in past years? I thought the nightmare of paying rent disappeared when buying and extending a lease?’

Panic not. Soon you will be able to face that stack of papers, go ahead and extend the lease, with a smile.

So, starting with ground rent. Don’t get fooled! Ground rent, nominal rent and peppercorn rent all refer to the same thing: the rent you pay for the ground your property sits on. As a leaseholder you rent a portion of ground from the freeholder. This is normally around £100 to £250 and due once a year as a lump sum.

But why is it so low? No, it’s not because it’s for mowing and tending to the garden (service charges). In order to enforce the terms of a lease a ground rent must be set. Many leases have tiny ground rents as the price was set hundreds of years ago without change. Freeholders, in those days, stipulated that the rent should be a peppercorn (as used in pepper grinders) to save them the trouble of collecting the money.

In theory the freeholder could still demand the peppercorn but in effect it means there’s no ground rent to pay. And that’s one of the advantages that extending a lease can bring: your ground rent drops to zero (or a peppercorn!).

Can you feel the air calming now that you know more before you extend your lease? Yes, but sometimes the term ‘chief rent’ is used, which many people mistakenly refer to as ground rent. Relax: this term is only relevant if you are purchasing a property in North West England, otherwise you can forget about it.

You turn to the now not-so-scary stack of papers…but that constant worry remains: service charges. Nothing severe here either, but that’s another story, for another time.