Some vital information about ‘Ground Rents’

‘The rent of the house can be categorized in 2 parts, the first one which varies properly is called as Building rent and the other is commonly called as Ground rent’.    

Adam Smith ‘An investigation into the nature and the causes of the wealth of Nations’ 1776

‘Ground Rents’ are very often multifaceted & can be very perplexing to the landlords and layperson alike.

What exactly is a ‘Ground Rent?

A ground rent investment is created once a freehold asset is put up for sale on an extensive lease, either separated as a solo house or as flats. In the earlier period, the establishment of a ‘ground rent’ on land offered profits to the property owner, whereas the builder could lease the property to construct a home and then put up for sale after completion.

Unfortunately, price rises has grind down the cost of most ‘ground rents’ with lengthy leases and decreasing incomes, as a result the cost of property owner freehold interest's wherever there is thumbs down vision of a deterioration in 150 years.

Why do many people make Ground rents?

If you are looking to convert a period home into flats & selling them independently, you will have to make a leasehold/freehold structure to manage combined block insurance and property maintenance.

Some land developers include “Share of the Freehold” ahead of purchasing a leasehold/freehold flat, frequently putting the ‘ground rent’ at a small amount. Buyers on the other hand, particularly when they don’t live in the residence, may prefer a 3rd party to manage the administration and management of the block.