I am always looking for examples of land rents, examples of home ownership without the need to buy increasingly expensive land. I didn’t expect to find one off the coast of New York’s Long Island.
The town of Babylon owns the island; homeowners pay a $1,800 fee to lease their land, which is added to the town’s annual taxes. Homeowners also pay an annual fee of $2,500 to the Great South Bay Isles Association for maintenance of community property, such as a repair to the floating docks off the parking lot. The association’s directors are elected by and composed of island homeowners. The lease, expected to be automatically renewed in 2065, limits occupancy to seasonal summer use.
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Imagine what these homes would sell for if they came with land:
Houses here don’t often come up for sale because “people keep them in the family,” said Lisbeth English, an associate agent with Netter Real Estate in West Islip. She is the listing agent of 24 Oak Street, a two-bedroom built in 1914, on the market for $249,880.
A red shingled house is under contract for above its asking price of $399,000, said Matthew Arnold, an agent at Netter. And Listing Pro has a four-bedroom, two-bath house listed on the island for $485,999.
Maybe not the most practical example, as this is a summer-only community. Yet it exists. And $1800/year for the land lease plus $2500 as a quasi-HOA isn’t onerous. The article mentions other taxes (likely on the buildings) but $360/month plus whatever that is seems to be something the residents are willing to pay. Here in Seattle, I would gladly pay the current property tax on a house and land as a ground rent if I only had to take on a mortgage for the house. That could cut the cost of an $800,000 property in half. Sure, you’d lose some of the benefits of a mortgage interest deduction but you’d also have more money each month, instead of waiting for the taxman to cough it up once a year.