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Hello, I would like to learn more about ground rents as investment. Specifically I would like to know what tools/models are used for their valuation. A spreadsheet model would be ideal, as well as info on the practical issues, if any, that have to do with managing the investment. Thanks very much in advance.

Obviously, but a company's financing needs and their investments will not change by transactions in the bond secondary market. At the end of the day if they need more cash they will go to the market, if they have excess cash they will deposit it with a bank. If they want to invest (real productive investment) they will do it; financing is a separate concern. Unless you are talking about a collapsed system where companies don't have access to financing and you are going to change that by providing it to them, which is not the case.

The difference wouldn't be small, it would be zero. Exactly zero. Banks are not deposit-restricted in making loans, mortgages included. Money is fungible; if you withdraw your deposit from a bank, and then buy a corporate bond for example, the company will deposit the cash to another bank (could be the same, doesn't matter), then the two banks will buy or sell the needed funds at the end of the day in the inter-bank market (banks with funding needs will buy the cash, those with excess funds will deposit them). Net result zero. From an accounting point of view, withdrawing your cash reduces the bank's balance sheet by reducing cash on the asset side and deposits on the liability side, and the end-of-day offsetting transaction will do the opposite, raise cash in the interbank market and increase liabilities accordingly. Bottom line, functionally you are making zero difference.

The spreadbet you mentioned is in fact the accurate hedge. The difference in price does NOT reflect expectations or "betting" on IG Index's side for future house price drop, but rather it's the forward price for the house index, i.e. the arbitrage-free future expected price, which is equal to spot plus the cost of carry. What most people forget when comparing asset prices in different time frames is that some assets have positive cash flows (they pay dividends/rent/interest), whereas others cost in order to own (most commodities require storage and/or insurance). The forward price reflects this. In the example you mentioned, the mid quoted price is 5.7% below spot, which reflects a rental yield of approx. 8% annualized. That means that if the rent you save by buying the house is equal to that figure (which must reflect the national average more or less) than you have your perfect hedge right there.