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The effect of ground leases on house prices in Helsinki

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Details

Original languageEnglish
Pages (from-to)451-470
Number of pages20
JournalJournal of Housing and the Built Environment
Volume30
Issue number3
DOIs
Publication statusPublished - 11 Sep 2015
Publication typeA1 Journal article-refereed

Abstract

One imperfection in housing markets is imperfect knowledge about legal interests such as ground leases. Both actual reduced legal interest as well as uncertainty surrounding rights and future lease payments for houses constructed on leased land may affect prices relative to houses built on freehold land. We use regression analysis of sales prices of condominium transactions in Helsinki to examine the effect ground leases have on house prices. We find that prices on condominiums constructed on leased lots are discounted at least 5 %, on average. In addition, we see that the announcement of potentially large increases in base rents upon renewal contributes to the discount.

Keywords

  • Condominium, Finland, Ground leases, House prices, Housing markets

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