What is a ground rent deal?

What is a ground rent deal?

A ground rent transaction is a type of financing under which a company can release a capital sum by selling and leasing back its real estate (with an option or other mechanism to reacquire the real estate for a nominal sum at the back end of the transaction).

What does onerous ground rent mean?

Onerous ground rents are those that double every 5-10-15 years or are linked in some way to the value of the flat. The latter is less so and more publicity has surrounded the 10 year doubling ground rents.

Why does ground rent exist?

History. In Roman law, ground rent (solarium) was an annual rent payable by the lessee of a superficies (a piece of land), or perpetual lease of building land. In early Norman England, tenants could lease their title to land so that the land-owning lords did not have any power over the sub-tenant to collect taxes.

How does ground rent work?

Ground rent explained The ground rent is the monthly fee that a homeowner pays to the holder of the leasehold property. So if the property you are living in has a leasehold, you can expect to pay a ground rent every month for essentially living on that land.

What is the benefit of ground rent?

Ground Rent Investments Offer a Safe but Steady Income Instead, ground rents are ideal for property investors who want a relatively safe but steady income stream. These benefits make ground rent investments an attractive asset class particularly for larger portfolio owners.

What are the new ground rent rules?

The Leasehold Reform (Ground Rent) Act means that if any ground rent is demanded as part of a new residential long lease, it cannot be charged at more than the cost of one peppercorn per year. This is known as ‘peppercorn ground rent’ and effectively sets the rate to zero.

Is there a limit on ground rent?

Its provisions, once in force, will restrict ground rents on newly created long residential leases (with some exceptions) to a token one peppercorn per year. This effectively restricts ground rents to zero financial value. The intention is to make leasehold ownership fairer and more affordable for leaseholders.