Are ground rents a good investment?

Ground rent investment are proving to be a very popular investment in the recent years especially in our current economy which does not seem to be change any time soon. People are opting for leasehold properties more and more. Actually it has become like a tradition in our country to buy leasehold property.

We have a lot of investors who are willing to buy ground rents which has long leases and most of them have no problem with short leases too. The investors looking to invest on long leases because they understand how much money the can make on those years they will be owning the property. Considering the fact that the inflation does not seem like it is going down anytime soon and the fact that the ground rent will keep on increasing throughout the terms of the lease.

The ground rents that are of short leases are usually sold at higher premium compared to ground rent with long leases. But the value of attached to ground rents with short term leases decreases at some point because of it can be difficult to obtain mortgage if the lease term is less than 80 years. So the freeholder will charge a premium which will depend on how short the lease is. So it might be riskier to invest on ground rent with short leases because there is no guarantee that the leaseholders are going to extend the lease. But all things considered the shorter the lease the more it is valuable to the freeholder.

If you are looking to invest on the ground rent business then you should make sure you have a solicitor to help you with all the paperwork as well as help you finalize the deal. Don’t be a victim of ground rent scandal just because you tried to finalize the deal on your own.