Surface right (ground lease)

A real right to build on land owned by a third party.

A building right (droit de superficie, or distinct and permanent surface right, DDP) is a real right that allows its holder to build and own a building on land they do not own. This right is registered at the land registry.

The leaseholder pays a periodic rent (ground rent) to the landowner. The duration of the building right is generally between 30 and 100 years.

For mortgage financing, building rights have specific characteristics: the bank considers the remaining duration of the right and the ground rent in its assessment. The LTV may be more restrictive than for a freehold property.

At the expiry of the building right, the construction reverts to the landowner, generally subject to compensation. This risk is factored into the property valuation.

Related terms