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Well, argumentum's point is that presumably there is some cost at which the ground holder would sell the land.

Like, if the ground rental brings in $10,000 per year to the owner of the title, and I came along and said, "I will pay your $1,000,000 for the title," well... I'm offering you one century's worth of ground-use fees up-front. Presumably all but the most irrational actors would sell their ground.



I'm not sure adding £1,000,000 to the price of houses is a rational solution to ground rent.


Of course, but that's nitpicking. The point is that the price is well out of reach of the average Tom.


Well, but why is it out of reach?

I mean, the same guy ("Tom") is going to be giving you money one way or the other. Either in bits and pieces as ground lease, or in lump-sum as purchase.

If you simply want more money than Tom can pay, well, you're out of luck. You don't get any money if you price your tenants out of the market.

If there is an amount of money that Tom can afford to pay in ground leases, then why can't he get a bank loan and make you an attractive offer on the purchase? My earlier example of 100 years rent was extreme to make a point. What if Tom offered you 20 years land rent in an up-front lump sum? Maybe not every land-owner would consider that a good deal, but it's hard to imagine that none of them would. The land-owner gets a present value that exceeds the future value of the rent to them, the bank gets interest, Tom gets synergistic value from now owning not just the house but the land.


I suspect you'll find the economics are such that most home owners wouldn't be able to afford to buy the land their house is on.


So what happens. Presumably there is a completely parallel market for land. Land owning elites presumably buy and sell land all the time and homes are bought and sold all the time as well. The two rarely intersect? Or maybe those that can buy land can easily buy the house as well? Very confusing. In US effectively the local government and the state "own" and you are just leasing it. There is not parallel land market unless jurisdiction lines get redrawn for some reason or a states secedes from the Union or something like that (you can imagine some negotiations then where the city say, this land with homes brings in $45M in property taxes/year, we wish to sell it for $1.3B cash...) of course this is all hypothetical...just to make a parallel.


Usually it's not a house, but a block of apartments, each of which are owned individually. It's usually cost prohibitive for someone who owns one apartment in a block of twenty to buy out the land for all twenty.




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