Land leasing is a common practice in urban construction and farming. A land lease is financial arrangement in which the ground under a construction is leased rather than sold to the builder. The land and the structure under such land lease arrangement are owned independently.

Land lease contracts are common for urban development and often get closed when a real estate investor wishes to retain a plot of land without primary interest or possibility of developing it.  The land investor might collaborate with a developer to create a land lease contract allowing the developer to build a structure and rent or sell it.  Under this type of lease contract, the land is simply leased, so it does not come with the building.

A contract for a land lease can run for various periods but most commonly, long term land leases last at least 50 years. Many European cities do not sell municipal land to private investors preferring to lease it per project. The land status under the building in such cases determines the market price of the property. Cadastral fees and land lease fees are paid by building owners in a similar manner as they would pay land taxes if they have actually owned the land. The only difference is the actual fact of proprietorship for the land.

Agricultural land leases are very common in the former USSR republics where land still cannot be purchased privates while its agricultural production potential is one of the highest in the World. Land lease contracts are conducted with local authorities or private “pie” holders, local farmers who own the latent ownership rights to the land and thus using this right for lease contracting.

Land leasing is also a philosophical concept of many environmental movements which say that every generation that thinks it owns the lands actually leases the land from the ancestors. Land is unique due to its limited amount. There is no production of land.  The land has always been there and no generation have ever produced the land apart from the example of the Dutch nation, which had conquered a significant part of the Netherlands from the Sea.

Thus, it would be in fact very logical that governments or local communities would abolish private ownership of land and implement only land lease agreements under the primary condition of preserving the land quality and improving it.

Tags: land