What does "ground rent" refer to in real estate?

Ground rent refers specifically to the portion of rent that is attributable to the land itself, as opposed to any buildings or improvements that may be on that land. This type of rent is typically seen in situations where a property owner leases a piece of land to another party who then builds or operates on that land. The tenant pays ground rent for the right to use the land, separate from any additional charges related to the construction or development that may occur on it.

Understanding ground rent is crucial for real estate transactions involving land leases, as it clarifies the financial obligations involved in leasing land versus occupying or developing it. It underscores the way in which land ownership and tenant rights can be distinctly separated in real estate practices.