The effect of ground rent and unexpired lease term on property values in Ghana

Gyau, KAB and Gyamfi-Yeboah, F 2019, 'The effect of ground rent and unexpired lease term on property values in Ghana' , International Journal of Housing Markets and Analysis, 12 (3) , pp. 504-524.

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Abstract

Purpose:
Although several factors influence property value determination depending on the market, relevant studies in Sub-Saharan Africa (SSA) often fail to analyse the impact of factors, such as unexpired term of leasehold interest and ground rent, which are also germane to market transactions and value determination. This study examines the effect of unexpired term of leasehold interests and ground rent on the valuation of residential properties in Ghana.
Design/Methodology/Approach:
A questionnaire instrument was used to collect the views of a sample of professional real estate valuers on the relevance of these and other factors that affect value. In addition, the valuers were tasked to value a residential property located in Accra, Ghana. OLS and Quantile regression models were thereafter used to analyse the data to determine the effect of the subject variables on value.
Findings:
The study finds a significant relationship between valuers’ views on the relevance of unexpired term of leasehold interest and the value placed on residential properties. Further, the respondents who viewed ground rent as an important factor in estimating values placed significantly lower values than those who viewed it as less important.
Research Implications:
The findings suggest that the respondents may have split opinion on the existing anecdotal evidence that market participants ignore the unexpired term of leasehold interest, an issue that should be settled in theory. The findings also highlight the diversity of opinion on some of the fundamental factors that affect value and the need to build consensus to prevent excessive variation in value estimates among valuers.
Originality:
The study makes a significant contribution in terms of extending the existing literature by analysing the impact of unexpired term of leasehold interests and ground rent on residential property values based on empirical data, issue(s) which have often been ignored by existing studies. Findings from the study also provide insights into additional possible causes of valuation errors in Ghana and SSA, which are useful for policy formulation and practice.

Keywords: Effect, ground rent, leasehold, residential, unexpired lease term, valuation

Item Type: Article
Schools: Schools > School of the Built Environment > Centre for Urban Processes, Resilient Infrastructures & Sustainable Environments
Journal or Publication Title: International Journal of Housing Markets and Analysis
Publisher: Emerald
ISSN: 1753-8270
Related URLs:
Funders: Royal Institution of Chartered Surveyors
Depositing User: KAB Gyau
Date Deposited: 20 Jul 2018 13:23
Last Modified: 31 Oct 2019 14:30
URI: http://usir.salford.ac.uk/id/eprint/47860

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