Benefits of a ground rent

If you were to overlook the consequences of the infamous ground rent scandal then, there are chances that you would be pleasantly surprised by the benefits that you could garner from the ground rent. Ground rent, also known as a ground lease, is commonly used in a commercial real estate, and it enables the tenants to lease a small portion of the land. It enables the landowner to retain the rights to the property but, it allows the tenants to maneuver a control over the property. Let’s have a look at the common benefits of ground rent.

Security:

One of the top benefits of securing a ground rent is that the landlords are given security rights on a long-term basis. In addition, they are also given the future appreciation of the property, which results in the development of the property. The improvements and buildings carried out by the tenants would become landlord’s property—unless it is stipulated in the contract.

Financial advantages:

Ground leases are regarded as an effective method for the tenants to secure a parcel of land, without indulging in the need to finance the property on their terms. By doing so, the tenants are given right to utilize the capital for construction purposes, along with other types of expenses instead of purchasing the property.

Protection from market fluctuations:

The ground rent scandal enables the tenants to protect themselves from the fluctuations made to the property. A real estate market is volatile more than it is stable, and it may not secure them a large profit margin if they were to yield profitability from the investment. It also protects the tenants from the inflation.

Tax advantages:

Another major benefit of ground lease is that the tenant is free from the responsibility of paying for land taxes.