HOUSING VIII

ASSIGNMENT
OWNERSHIP TYPES AND LAND VALUES

PRASHANT ARYA
10001006027

ANISHA RAI
10001006012

Ownership is the state or fact of exclusive rights and control over property, which may be an
object, land/real estate or intellectual property. Ownership involves multiple rights,
collectively referred to as title, which may be separated and held by different parties. The
concept of ownership has existed for thousands of years and in all cultures.
There are two fundamentally different forms of legal ownership: freehold and leasehold.
FREEHOLD
A freehold interest (also known as a fee simple) is the more precise term for what we
ordinarily refer to as ownership of a property. The owner of the freehold interest has full
use and control of the land and the buildings on it, subject to any rights, local land-use
bylaws and any other restrictions in place at the time of purchase.
Freehold is pretty much always the preferred option: you cant really go wrong with it.

You wont have to pay annual ground rent

You dont have a freeholder either failing to maintain the building, or charging huge
amounts for it
You have responsibility for maintaining the fabric of the building the roof and the
outside walls
Whole houses are normally sold freehold

LEASEHOLD
In some cases you might purchase the right to use a residential property for a long, but
limited, period of time. The owner of this right of use has a type of ownership called a
leasehold interest. This type of ownership is used most often for townhouses or apartments
built on city-owned land. Leasehold means that you just have a lease from the freeholder
(sometimes called the landlord) to use the home for a number of years. The leases are
usually long term often 90 years or 120 years but as high as 999 years but can be short,
such as 40 years.
A leaseholder has a contract with the freeholder, which sets down the legal rights and
responsibilities of either side
The freeholder will normally be responsible for maintaining the common parts of the
building, such as the entrance hall and staircase, as well as the exterior walls and roof.
However, other leaseholders might have claimed their right to manage, in which case it
is their responsibility
Leaseholders will have to pay maintenance fees, annual service charges and their share of
the buildings insurance
Leaseholders normally pay an annual ground rent to the freeholder

Leaseholders will have to obtain permission for any majors works done to the property

Leaseholders may face other restrictions, such as not owning pets or subletting

If leaseholders dont fulfil the terms of the lease for example, by not paying the fees
then the lease can become forfeit

RENTING
Renting is an agreement where a payment is made for the temporary use of a good, service
or property owned by another.
COOPERATIVES
In the cooperative form of ownership, each owner owns a share in a company or
cooperative venture, which, in turn, owns a property containing a number of housing
units. Each shareholder is assigned one particular unit in which to reside.
REASONS FOR RENTING
There are many possible reasons for renting instead of buying, for example:

In many jurisdictions (including India, Spain, Australia, UK and the United States) rent
used in a trade or business is tax deductible, whereas rent on a dwelling is not tax
deductible in most jurisdictions.
Financial inadequacy, such as renting a house when one is unable to buy it. One may
not wish to pay the full price that ownership would need, allowing for smaller
payments over a specified period of time.
Reducing financial risk due to depreciation and transaction costs, especially for real
estate which might be needed only for a short amount of time.
When something is needed only temporarily, as in the case of a special tool,
a truck or a skip.
When something is needed that may or may not be already owned but is not in
proximity for use, such as renting an automobile or bicycle when away on a trip.
Needing a cheaper alternative to buying, such as renting a movie: a person is
unwilling to pay the full price for a movie, so they rent it for a lesser price, but give
up the chance to view it again later.
The renter may want to leave the burden of upkeep of the property (mowing the
lawn, shoveling snow, etc.) to the owner or his agents.
There is no need to worry about lifespan and maintenance.
Renting can be better for the environment if products are used more efficiently by
sharing rather than being disposed of or overproduced.
Growth of rental industry

What is commonhold?

Commonhold is a variant of freehold, created by the Leasehold Reform Act of 2002,

which overcomes some of the worst aspects of leaseholds.

Commonhold is where a multi-occupancy building is divided into a number of

freehold units, so each individual flat owns its own freehold. The common parts
(staircases and hallways etc) are owned and managed by a Commonhold Association,
a company that is itself owned by the freeholders of the flats.

This means there is no superior freeholder, but rather the owners of the flats manage
the common and external parts of the property jointly. This protects people both
from greedy landlords, and from the problems of short leases.

But, as with any form of community ownership, problems and conflicts can arise
between members of the Commonhold Association. Moreover, only about 15 to 20
commonholds have been completed in the UK.

LAND VALUE
The value of a piece of property, including both the value of the land itself as well as any
improvements that have been made to it. Land values increase when demand for land
exceeds the supply of available land, or if a particular piece of land has intrinsic value greater
than neighboring areas.
Not all land is created equal, and people are willing to pay a much higher premium for a plot
of land in a prestigious neighborhood than they would for a similar-size lot somewhere else.
The amount someone is willing to pay for a piece of property is known as land value, and it
ebbs and flows with the economy and current land market.
FACTORS WHICH AFFECT LAND VALUE:
Many factors influence the value of real estate. For urban areas--which are characterized by
higher density populations---there are more factors that affect a property's value than there
would be in a more rural area with fewer development options. Location, use, and
applicable legislation all contribute to the value of land in urban settings.
ZONING. LANDMARK STATUS. PROXIMITY TO TRANSPORTATION
SCARCITY
The basic principles here remains the same, that something which is tradable and is
available in plenty have lesser value than something which is available in less volume. This
factor is very significant, e.g. we can see that the prices in the prime locations of any city,
town or just any region is always higher than prices in the suburbs as the prime locations has
much more facilities and amenities which are available and due to which many people want
to move over there and set up their business or buy a home there. This increases the
demand whereas the prices in the suburbs and outskirts are low because land is scarce in
the cities and the opportunities are less and lifestyle too is not as good as towns. Here if you

are able to buy land that is scarce at a reasonable price you will be able to make a profit for
selling later at a higher price.
ARABILITY
There are many land areas which are very fertile and cultivable. Places which are fertile and
are cultivable are valued very high than non-fertile areas. If you purchase fertile land, you
can easily sell it in the future as arable land is always in demand especially for agriculture.
Due to this great demand for arable land the price that can be had is usually good.
ZONING ISSUES
There are local authorities that will place certain restriction on the kind of development that
can be done on the land. Certain areas are zoned for certain kinds of development and
amenities. Every land owner must apply for permission from the authorities to do any kind
of development on any land. Permission is granted or denied based on zoning laws and
other considerations and these all will affect the land price.
DEVELOPMENT
The land value is also greatly affected by the kinds of development that takes place on it. If a
very successful business is developed on it then you can include it in the overall value of the
land. You can also choose to sell off the business while still retaining the property. This can
help in earn profit from two sources. Thus, profit is coming from selling the business for a
good profit and also a regular fixed income from the use of the land by the new business
owner
TAXES
The land value is also very much dependent on the area it is located in and the taxes that are
attached to it. If the land tax is considerably high, then it might be a very god reason for the
potential buyer to make another choice. Different states have different tax rates attached to
land and depending on the type of land there may be a different tax attached. Also the size
of the land will affect the amount of tax paid. Thus the larger the land the more tax will be
paid and vice versa. Also the land to be invested in may have tax arrears that must be paid
up before any transfer of title can occur.
SECURITY
The safety of the area in which the land is located, is an important factor in determining land
value. If the area is one that is crime riddled then the value will be lower. The safer the area
the land is located in, the more likely that the land investment can produce positive returns
over the long term.
When making a land investment these factors that affect land values are to be seriously
considered and steps taken to reduce or eliminate their effects. Security the safety of the
area in which the land as located, is an important factor in determining land value. If the
area is one that is crime riddled then the value will be lower. The safer the area the land is
located in, the more likely that the land investment can produce positive returns over the
long term.
When making a land investment these factors that affect land values are to be seriously
considered and steps taken to reduce or eliminate their effects.