Ground rent payment is the name which is given to the rent which a leasehold owner must pay to a freeholder for the land which their property stands on.Properties are either sold as Freehold or Leasehold. The vast majority of houses are sold as Freehold investments whereas the vast majority of flats are sold as leasehold. To just put it the Freehold of a property is the ground on which it stands on, as well as the outer shell of the building which contains it.
Flats are often sold off as leasehold investments for several reasons. The primary cause of this is that a freehold title would only refer to the ground on which the property is situated. This means that you would not be able to own the freehold of a first floor flat or distinguish between it and a ground floor flat at a property, without granting of leases. The grant of a lease enables the Freeholder to sell off part of the development for a specified number of years, detailing specifically which parts of it would be included and on which level(s).
If you currently own a freehold, then you may already be well aware of the burden of managing a block far outweighs the minimal level of income you receive from it. Selling the ground will firstly relieve you of the responsibilities of managing the block and furthermore free up a considerable amount of cash.
As you are most probably aware interest rates are currently at rock bottom, and freeholds are looking increasingly more attractive to investors. If you have small developments and have retained the freehold interest as a small income stream, now may be the best time to realise the investment potential.
Specialist ground rent payment companies are interested in your freehold regardless as to whether you have an extensive portfolio or development, a small house conversion or short or long term leases. Alternatively, it is possible that you could have inherited a freehold, have acquired it through property development, or that you or your clients have acquired freehold ground rents and are looking to cash in on your investments with a specialist. One of the benefits of using a ground rents specialist is that they are usually not an agency or broker meaning that there’s no middleman as Ground Rents are their business. They understand the market as well as the extensive legislation which applies to leasehold properties.
As many people have already realised the greatest benefit of selling your freehold is that it can help you free up your investment and give you the money that it’s worth to spend on other things, at your leisure.
When a block of flats is converted or developed, ground rents are typically retained by the developer or offered in part to the large leasehold purchases. Developers can enjoy greater liquidity by selling ground rents, and they can also remove the administrative burden that collecting these rents can place on a small investor. If ground rents are the last remaining asset in development, then it can prove cost prohibitive to retain and manage this passive income, especially when the developer could sell ground rents and use the capital to purchase distant land or create new development projects.