What Is Ground Rent in Real Estate?

Ground rent is an agreement between a landlord and a landlord, where a landlord pays for the right to use a land. With the rent of the land, the tenant owns the property but does not own the property itself. The land rent shall be paid to the landlord as a fixed fee. The concept, however, lead to the occurrence of ground rent scandal and it has been a turn off for most leaseholders:


Ground rent enables low - income homeowners to enter the home market by reducing home ownership costs. If you pay the rent of land, you do not own the land on which your property is situated, but you have the right to use it. This makes it much cheaper to buy a home and easier for first time home buyers.

Purpose of ground rent:

The concept and purpose of the ground rate in the United Kingdom is fairly old. It was initially developed to alleviate the costs of home ownership, as the buyer of the apartment was only required to pay for the property, and it wasn’t required to pay for the land itself.

If a person converted a property into a number of apartments or, even family units then, it should be able to create a leasehold structure that pertains to dealing with the insurance and maintenance issues with the properties.

It allows the owner of each apartment to simply lease the land. A majority of the parties may view it as a feasible option as it would allow them to not take care of the administration and management responsibilities involved in the process.

While the concept of round rent scandal may be prevailing, and whatnot—one should look on the brighter side to make up their mind, and try to decipher the benefits that they could garnered from the transaction.