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Alan Pope

Doctor of Philosophy, (Economics (Property))
Study Completed: 2019
Massey Business School


Thesis Title
Ground Leaseholders’ Perception of Rent Review Risk: The Impact of the Availability Heuristic

Read article at Massey Research Online: MRO icon

Mr Pope investigated ground leaseholds (where rent is paid for the land) through 25 semi-structured interviews with ground leaseholders. When purchasing a ground leasehold, these participants indicated that there was insufficient consideration of higher ground rents when reviewed. Ground leaseholds may appear inexpensive compared to freeholds. But due to ground rents being commonly set as a percentage of freehold value, an increase in ground rent leads to a lower ground leasehold value during rent review time. This value relationship was explored in an experiment with 40 property investors. Results showed that the freehold value growth information was too available to investors, which led to over-estimation of ground leasehold values. With ground leaseholder misunderstanding being genuine, ground rent review clauses may not be fit for purpose, warranting review where possible.

Professor Graham Squires
Professor Martin Young
Professor Paul Gallimore