Ground Rent Capitalisation
Capitalise a ground rent income stream to a capital value.
Introduction
Who this is for: Freeholders and investors valuing ground rent portfolios.
Why it matters: Ground rents are valued by capitalising the income to the end of the term. Escalating rents are worth substantially more than fixed ones, but recent leasehold reform has materially altered the market for ground rent investments.
Typical scenario: A freeholder valuing a block producing £250 per flat with RPI reviews every ten years.
- Valuing an escalating rent as though it were fixed.
- Ignoring that doubling rents may be unmortgageable, which reduces marketability and value.
- Applying a single capitalisation rate regardless of covenant or term length.
Inputs
Income
years
Valuation
years
flats
Analysis
£6,000 of ground rent on a rpi-linked basis, over 95 years at a 5.5% capitalisation rate, values at approximately £215,410 — £8,975 per flat, or 35.9 years purchase. This is a screening estimate only.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Live Results
Capital Value
£215,410
Value per Flat
£8,975
Years Purchase
35.90x
Multiple of Current Rent
35.90x