# How Can Ground Leases Fund Affordable Housing?

Ground leases fund affordable housing by bifurcating land ownership from building improvements to provide long-term capital with predictable obligations. According to Safehold Inc., the company launched a dedicated affordable housing platform in 2025. By separating the underlying land, sponsors can lower upfront equity needs and lock in stable costs over generations.

## How Do Ground Lease Structures Operate?

According to Safehold Inc., its 99-year ground leases are structured with fixed 2% annual rent increases to provide predictable long-term costs. In tax credit transactions, this structure alters available financing terms. According to Safehold Inc., utilizing its ground lease structure can increase permanent period proceeds for 4% Low-Income Housing Tax Credit projects by 10% to 20%.

Since modern ground lease frameworks were adapted for broader commercial real estate, adoption has scaled across key regions. According to Safehold Inc., the company has funded more than $7.0 billion in ground lease capital since 2017 across the top 30 metropolitan statistical areas.

## Where Are Developers Using Ground Leases?

Much of the activity has centered on markets with acute housing supply constraints. According to Commercial Observer, Safehold Inc. has closed more than 25 ground leases for federal Low-Income Housing Tax Credit developments in California as of October 2026.

Specific project commitments illustrate the deployment across Western and Sun Belt markets. According to Safehold Inc., the company finalized a $45 million ground lease in June 2026 with The Pacific Companies to develop a 256-unit affordable housing community in Santa Cruz, California, projected for completion by 2028. According to Safehold Inc., the company closed two ground leases in June 2026 with The Pacific Companies to build affordable housing developments in Ventura County and San Diego County, which will deliver 570 total units upon completion. In addition, according to HousingWire, national developer The NRP Group closed a 99-year ground lease with Safehold in June 2026 for a 336-unit affordable housing project in Austin, Texas, targeting delivery in 2028.

## What Is the Broader Real Estate Context?

These financing models operate within a wider national market experiencing specific inventory and performance dynamics. According to Realtor.com, NAR & Census via FRED, U.S. homes sold in 2026-09 was 332,500. According to Realtor.com, NAR & Census via FRED, U.S. inventory in 2026-09 was 1,161,615, while U.S. new listings in 2026-09 was 394,830.

Broader sector returns also reflect varied capital market conditions. According to Financial Modeling Prep, daily closes (licensed), US real estate is 2.5% year to date as of 2026-10-19. Over the same timeframe, according to Financial Modeling Prep, daily closes (licensed), Infrastructure is 10.4% year to date as of 2026-10-19, Agriculture is 10.5% year to date as of 2026-10-19, and Energy is 51.6% year to date as of 2026-10-19.

## Sources

- Safehold Inc.
- Commercial Observer
- HousingWire
- Realtor.com, NAR & Census via FRED
- Financial Modeling Prep

*Educational disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice.*

Educational content. Not an offer, an investment recommendation, or legal or tax advice.

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