Ground rent

As a legal term, ground rent specifically refers to regular payments made by a holder of a leasehold property to the freeholder or a superior Leaseholder, as required under a lease. In this sense, a ground rent is created when a freehold piece of land is sold on a long lease or leases. The ground rent provides an income for the landowner. In economics, ground rent is a form of economic rent meaning all value accruing to titleholders as a result of the exclusive ownership of title privilege to location.

In Roman law, ground rent (solarium) was an annual rent payable by the lessee of a superficies (a piece of land), or perpetual lease of building land. In early Norman England, tenants could lease their title to land so that the land-owning lords did not have any power over the sub-tenant to collect taxes. In 1290 King Edward I passed the Statute of Quia Emptores that prevented tenants from leasing their lands to others through subinfeudation. This created a system of substitution, where the tenant's full interest would be transferred to the purchaser or donee, who would pay a rentcharge. This system later passed into common law in England and was adopted by many nations which trace their legal heritage to Britain.

Classical economists and Georgists quantify ground rent to investigate and capture unearned income called Economic rent, as distinct from labor-made income.

The value of the freehold interest comprises:

In economics, ground rent means all economic value accruing to owners of land, regardless of whether payments are explicitly made or the rents are imputed. Various assessment methodologies are employed by real estate appraisers.

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