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What you need to know about the sale of ground rents Fri, 23 May 2014 17:06

As well-known cash buyers of property, Dream House Buyer caters for a wide range of requirements among those wishing to sell their house quickly. For some, problem properties are the specific issue, while others may be looking to sell their ground rents.

 

A ground rent is a regular payment that a freeholder receives from the owner of a leasehold property, as is required by a lease. It provides the landowner with an income and is created with the sale of a freehold building or piece of land on a long lease or leases. The building may be divided as flats or sold as a single house. As ground rent is also sometimes referred to as a rentcharge, it can be easily confused with Chief Rent, which is also known as a rentcharge and needs to be paid on some freehold property.

 

Freehold and leasehold interests on houses do tend to be unified these days, although some flats may still be held freehold. The management of communal areas and the arrangement of buildings insurance then becomes the responsibility of the freeholders, with the respective fee and commission that they collect adding to their income.

 

Ground rent also brings capital gains, although these are greatly influenced by the exact lease length and terms. Leases with fewer than 80 years still to run are regarded as 'short' leases, with their value plummeting once they pass that point, while when a lease is first issued, it is usually for 100 or 125 years and is therefore regarded as 'long'. Sometimes, leases can be extremely long - typically 999 years when issued.

 

One drawback with ground rent is that it can be greatly affected by inflation, with potentially very archaic rental growth terms. There may not be any provision for increases in the rent, or it may double every 25 or 33 years.  Nor do ground-rent investments provide a steady and consistent return, with the entire capital return coming suddenly as and when the tenant decides to extend the lease.

 

Dream House Buyer is happy to serve those looking to sell their ground rents, offering the most competitive price. With an active record of investment in freehold ground rents, we are highly knowledgeable about this market and can assist whether you have a modest converted property or a more substantial development or portfolio. Contact us now to find out more about our property buying services. 



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