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Comment by argumentum | Hacker News Reader

I don't understand .. why would you purchase a home without the land it rests on? In a free market, perhaps there is some lower price where you would do this, but there is also a higher price where you could purchase the land as well.

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People buy Condo's all the time. Also, in the United States, you very often give up mineral rights. So you may own the "ground" your home is on, but you don't own whatever comes out of it.

Condominium owners usually own a proportional share of the land that the building rests upon and the common areas of the property.

That seems almost like a scam. Kind of like time shares.

Why would that be a scam? If anything, it protects the unit owners from things like the landlord selling the building and forcing everyone to move. You can't sell an entire condo building and land without clear title from every single unit owner.

Not really.

Some more info: http://en.wikipedia.org/wiki/Fractional_ownership

http://en.wikipedia.org/wiki/Concurrent_estate

Condos differ from time shares. In a condominium, you own 100% of a unit and everything inside the boundaries of that unit is your responsibility (repairs, damage, upgrades, etc). You also have exclusive access to that unit (nobody else can use it, unlike a time-share).

You own a fraction of the land that the building sits on, and a fraction of the "common areas" (lobby, swimming pool, parking lot, etc). You are responsible for contributing for the maintenance of those areas, or paying assessment fees to a management company that will take care of those areas.

Because that's the only type of home on the market!

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.

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

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.

I used to live in a city with a community land trust. You can buy the house and get a long-term lease on the land but the land trust (a non-profit organization) retains ownership of the land. They also have a right to buy the house back when you sell it, limiting you to 25% appreciation.

The intention is to keep house prices affordable. (Sort of an upscale trailer park, now that I think about it). If you had the means to buy elsewhere, you probably would.

http://en.wikipedia.org/wiki/Community_land_trust

Once there are separate owners (for whatever reason it happened), it's not that easy to arrange that - since the land owner usually does not want to sell.

What if they do sell? Can land owners do whatever they like to the home owners? Like kick them out? Start drilling tunnels through the land, extract oil in the back yard?

Unscrupulous landlords will increase the rent.

Usually the home owner will have a lease that lasts for 99 years (or at least the person who first built the home had a lease for 99 years...).

Mortgage providers won't give you a mortgage term that ends after the lease does.

Well, what if most houses in an economy were what we called apartments?

Also, in China, the people (gov) owns the land. We are only entitled to a 70 year lease on it. Oddly enough, this is applied to housing (apartments) also. But China also lacks a property tax and so has all the bad speculation behavior and rent-seeking that goes along with that.

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