Jennifer Adams considers the tax implications for landlords when renting out a property at a reduced rent or rent-free.
Not all landlords let property to make a profit, be that an income profit or capital gain. There are various circumstances in which a landlord may let at a rate below the current market rate (termed an 'uncommercial' rent) where, for example, a landlord who has otherwise empty properties rents to family and friends at a low rent or even rent-free. The definition of an ‘uncommercial’ let is a property rented for less than the market rate of a comparable property in the neighbourhood.
'Peppercorn' rents are also 'uncommercial'. Until the Leasehold Reform (Ground Rent) Act 2022 was passed, there was no legislative definition of ‘peppercorn’ rent. This Act now defines a 'peppercorn' rent as ‘an annual rent of one peppercorn’. Therefore, such a payment
