Ground Rents for sale at auction

What are the advantages of buying ground rents and most importantly, why would they be for sale by the previous freeholder if they are such a good investment?

Some of them are very cheap, are you expected to have them for 99 years?

Can you link to what you've seen?

Can you link to what you've seen?

No, old auctions I came across surfing the net last year.

This piqued my interest because of the tribulations I've been going through with my freehold reversioner (which I've learnt is the proper term for the person who owns the freehold, I am the leaseholder - see my posts on the Coppen Estates thread).

Now, my ground rent is a measly £4.00 a year so I doubt my lease was very valuable but then again the term is very long. So if my FR picked up the lease at auction for, lets say £200 (I've really not got the foggiest what they go for), they've got the right to extract that money for some 800 years. So it's equivalent to holding a share paying a 2% dividend.

You get this plus selling it on when you're done with it (poss to the leasholder themselves!) to get your capital back, although like shares it may not be worth as much as when you bought it, but it may be worth more - especially if there's not many years left to run.

Also, they look for nice little perks like charging you to insure your house, charging for permission to build a extension and other 'covenants' that are in the lease (no need to go on about my feelings on this, check my other posts)

and of course I suppose in theory - and this was part of their original purpose - if you pass it through your family for 800 years, your great great great (etc) grandchildren get to evict the tenant, knock down the house and sell the land.

That's the basis of investment, I suppose. As ever with these queries Jeffrey Shaw is your man for a definitive answer.

Now, my ground rent is a measly £4.00 a year so I doubt my lease was very valuable but then again the term is very long. So if my FR picked up the lease at auction for, lets say £200 (I've really not got the foggiest what they go for), they've got the right to extract that money for some 800 years. So it's equivalent to holding a share paying a 2% dividend.

Yes, that's more or less it.

But not every case is identical. Possible differences:

1. Leases where the unexpired term is less than 80yrs.

2. Flats.

3. Commercial premises.

Can you link to what you've seen?

Here you go, and look, not even a reserve.

http://www.a-r.co.uk/property-for-sale-by-auction/lot-details/194-and-194a-psalter-lane-sheffield-south-yorkshire-s11%C2%A08ut/44163

I'm slightly confused as what is for sale there.

Is it just the right to collect the ground rent? or is it the freehold reversion of the property?

I'm slightly confused as what is for sale there.

 

Is it just the right to collect the ground rent? or is it the freehold reversion of the property?

Can it not be both? As freeholder would also be responsible for serious repairs, roof etc.

I'm slightly confused as what is for sale there.

 

Is it just the right to collect the ground rent? or is it the freehold reversion of the property?

Can it not be both? As freeholder would also be responsible for serious repairs, roof etc.

The right to collect the ground rent is part of what the freehold reversion brings. BUT the freehold reversioner is not usually responsible for repairs etc. if it's a house; the leaseholder is. Different rules apply in the case of flats.