Buying Ground Rent - Good idea?

[yobalon78]

I have seen quite a few ground rents for sale and was wondering why people bother to buy them. They return about 4-5% on your investment, so not really that great since good bank accounts pay 5-6%. Am I missing a trick, is there a shrewd investment opportunity I'm missing?

[spudqueen]

Well if it was for your own house then if you bought it you wouldn't have to pay ground rent anymore.

[EverClean]

There are people who buy up freeholds and increase the ground rents substantially. They also find much cheaper buildings insurance providers but don't pass the savings on to their tenants. They can also do work to the communal areas at cost (especially if they are builders) and charge tenants at retail. There are many legal ways of making money out of tenants but most of them are not fair.

[Jezzer187]

Hi There,

Investment in ground rents is normally based around the prospect of a capital reversion at the end of the lease term, not the initial income. This results in them being illiquid, but quite tax effecient as the return is in the form of a capital gain not recurring annual income.

If you wish to sell ground rent investments then please consider getting in touch. I operate the website www.groundrentswanted.com and can be contacted on 0800 756 6412.

I hope this is helpful