What is a ground lease?

Ground leases often run for 50 to 99 years and usually include rent increases. When the term ends, the land returns to the landowner’s use, and the building often passes with it, under the lease’s terms. As fewer years remain, lenders and buyers tend to become more cautious, so the time left on the lease matters.

Say a landowner leases a plot for 99 years at $2 million a year. A developer builds a tower on it and pays the rent, while the land stays with the owner.

It lets an owner buy or build with less capital, but the rent and the end of the lease affect what the building is worth and how easily it can be financed.