A house, but no property: What initially sounds unusual is actually common practice in many cities. The long-term lease, or more precisely the leasehold, is intended to relieve the financial burden on buyers. But what seems sensible at first glance can later turn out to be a burden.
A model with history and new opportunities
In times of rising real estate prices, leasehold building rights are becoming increasingly important again. The basic idea is simple. Anyone who wants to build or buy a house does not purchase the property, but rather leases it for a set period of time. The purchase price is therefore noticeably lower. Cities, churches or foundations usually grant hereditary building rights with terms of between 50 and 99 years. In return, a ground rent is paid annually, which, according to the RND, is often between two and five percent of the land value.
Property becomes more affordable
In many metropolitan areas, land is the largest cost factor. If you don’t have to buy it, you can quickly save six-figure amounts. There is also an advantage when it comes to additional purchase costs such as property transfer tax or notary fees, as these only apply to the building.
Ground rent
What initially seems like relief can become expensive over decades. The ground rent is due annually. With a fictitious land value of 150,000 euros and an interest rate of four percent, costs of 6,000 euros per year arise. After 30 years that adds up to 180,000 euros. Many contracts also allow the interest rate to be adjusted regularly, for example every three years, according to baufi24.de.
What happens at the end of the contract is crucial
Leasehold contracts are limited in time. If the contract expires and no extension has been agreed, the house reverts to the property owner. The so-called repatriation law can be expensive. Although there are legally required compensations, these are often not based on the actual market value. GEV insurance expressly warns of this risk. A poorly worded contract can result in little assets remaining despite decades of payments.
It is not guaranteed whether and under what conditions the contract will be extended. An early and clear regulation in the contract creates security. Otherwise there will be a dependency on the landlord, who decides on the continuation.
Financing and resale are difficult
Financing leasehold properties involves additional uncertainty for banks. As immoverkauf24 reports, many lenders require the loan to be repaid in full before the lease expires. In practice, this means shorter terms and therefore higher monthly payments. Selling is also more difficult. If the remaining term decreases, the property becomes less attractive for potential buyers.
Editorial team finanzen.net