Article by Shane O’Beirne, Director, Valuation and Advisory, at Lisney. (sobeirne@lisney.com)

Overview

A large part of the layout of Dublin as a modern city and suburbs is due to the landed estates that made it up and the system of ground rents over recent centuries.  We often think of ground rents in how the Georgian heart of the city was developed.  However, their use extends far beyond that to most parts of the city to include land under some of our most modern office blocks, landmark buildings, and development opportunities.

In the modern era, while many of these ground rents can represent relatively small annual costs due to inflation, when the ground leases begin to run shorter or where they feature restrictive covenants, it can impact on the ability to raise finance against the property, buy or sell it, or seek to redevelop it.

Over the years, legislation has been put in place to assist property owners to acquire ground rents and enlarge their titles into full unencumbered Freeholds.  These are set out in the Landlord & Tenant Acts 1967-2019 and allow a property owner to regularize their title provided they meet certain criteria.

Understanding ground rents to include their impact on property values is often misunderstood or underestimated by property owners.

Once eligibility is established by obtaining good legal advice, property owners can seek to negotiate with the ground landlord to acquire the freehold.  Alternatively, if agreement cannot be reached, or if the ground landlord is unknown or unascertained, then there is an option to seek to resolve it by referring to the County Registrar with legal support and an experienced valuer.

The calculation of the purchase price is determined with reference to the relevant legislation with factors such as lease term, size, location, rent and residue having a bearing on the price.

For those seeking professional advice in navigating this, understanding the nuances of the valuation process is critical.  At Lisney, we specialise in guiding clients through the complexities of acquiring ground rents from preliminary advice through to negotiating a price or presenting evidence to the County Registrar to assist in determining the Fair Purchase Price.

If you require assistance in regularising your property’s title and would like tailored advice, please do not hesitate to contact us.

The History of Ground Rents and Dublin’s Development

The concept of ground rents dates back centuries, originating as a mechanism for landlords to generate steady income from their lands while tenants gained access to long-term leases. In Ireland, particularly in Dublin, ground rents became a prevalent feature during periods of urban expansion, serving as a strategy to facilitate property development. This system allowed landlords to retain ownership of the land while leasing it to tenants who built homes, businesses, or other structures, paying a regular rent for the privilege.

During the 19th and 20th centuries, the ground rent system extended to commercial properties, enabling the establishment of retail districts, offices, industrial, and public facilities.

Challenges and Reforms

Over time, ground rents became a source of contention, particularly as tenants sought greater autonomy over their properties. The notion of continuous rent obligations, sometimes tied to nominal ground rent sums, generated calls for reform. The Landlord and Tenant Acts, including the pivotal 1978 (No. 2) Act, addressed these concerns by offering tenants a pathway to acquire the freehold interest in their properties.

For more research or insights our expert team at Lisney is here to help.