Hello,
I’m new to this forum and have browsed through the search a bit, but haven’t quite found what I’m looking for.
Here’s the topic:
We (a young couple in our early 30s, both working) are currently looking to buy residential property (condominium or house). We are really new to this and feel a bit overwhelmed by the whole process. The internet offers a thousand different opinions.
We currently have an offer and would like to hear your opinions on it, as well as learn about experiences with this kind of situation and what additional costs we should expect.
- End-terrace house on a leasehold property
- Leasehold term: 75 years
- Construction start next year
- Plot size about 400sqm (4300 sq ft)
- The leasehold land belongs to the Catholic Church and is located in Saxony, near Leipzig
- I have a leasehold contract for a comparable property from the same project. It states that the annual ground rent is €2.50 per sqm (about $2.70 per 10.8 sq ft)
- No commission fee; property transfer tax and notary fees must, of course, be paid
- The total cost should be around €200,000–220,000 (about $215,000–235,000)
Now the questions:
- What are the general experiences with leasehold properties?
- What ongoing monthly or annual costs can we expect in addition to the mortgage payments?
We have calculated various loan options and ideally do not want to take on more than €260,000 (about $280,000) in credit. Since it is difficult to find something within this price range in Leipzig and the surrounding area, this seems like a suitable alternative at first glance. However, many acquaintances advise us against leasehold.
Therefore, I hope to get some independent opinions from you.
Best regards from Leipzig
I’m new to this forum and have browsed through the search a bit, but haven’t quite found what I’m looking for.
Here’s the topic:
We (a young couple in our early 30s, both working) are currently looking to buy residential property (condominium or house). We are really new to this and feel a bit overwhelmed by the whole process. The internet offers a thousand different opinions.
We currently have an offer and would like to hear your opinions on it, as well as learn about experiences with this kind of situation and what additional costs we should expect.
- End-terrace house on a leasehold property
- Leasehold term: 75 years
- Construction start next year
- Plot size about 400sqm (4300 sq ft)
- The leasehold land belongs to the Catholic Church and is located in Saxony, near Leipzig
- I have a leasehold contract for a comparable property from the same project. It states that the annual ground rent is €2.50 per sqm (about $2.70 per 10.8 sq ft)
- No commission fee; property transfer tax and notary fees must, of course, be paid
- The total cost should be around €200,000–220,000 (about $215,000–235,000)
Now the questions:
- What are the general experiences with leasehold properties?
- What ongoing monthly or annual costs can we expect in addition to the mortgage payments?
We have calculated various loan options and ideally do not want to take on more than €260,000 (about $280,000) in credit. Since it is difficult to find something within this price range in Leipzig and the surrounding area, this seems like a suitable alternative at first glance. However, many acquaintances advise us against leasehold.
Therefore, I hope to get some independent opinions from you.
Best regards from Leipzig
F
fusselchen8916 Jul 2019 14:03Thanks in advance for all the many replies.
Are there any experiences or data on whether leasehold land is more often extended or not after the agreed period expires?
In addition to the leasehold payment, do I also have to pay property tax?
The house is planned to be located on the outskirts of a large district town (just under 20,000 inhabitants, about 30 minutes by car from Leipzig city center) between Leipzig and Halle. I have found only a few comparable plots in that area in terms of size. These were priced around €70,000 to €80,000 for 400sqm (4300 sq ft).
Are there any experiences or data on whether leasehold land is more often extended or not after the agreed period expires?
In addition to the leasehold payment, do I also have to pay property tax?
The house is planned to be located on the outskirts of a large district town (just under 20,000 inhabitants, about 30 minutes by car from Leipzig city center) between Leipzig and Halle. I have found only a few comparable plots in that area in terms of size. These were priced around €70,000 to €80,000 for 400sqm (4300 sq ft).
N
nordanney16 Jul 2019 14:26fusselchen89 schrieb:
Are there any experiences or data on whether ground lease agreements are usually extended after their fixed term expires, or not?It depends on the contract. It can happen or not. You shouldn’t worry about that with a term of 75 years (and generally, no one does). And even if it is not extended, so what? There is usually compensation for that. You probably won’t be around to experience it anyway...fusselchen89 schrieb:
In addition to the ground lease, I also have to pay property tax, right?Yes, typically all costs that any property owner or tenant has. Property tax, waste collection, street cleaning, etc.fusselchen89 schrieb:
I have found very few comparable plots in size nearby. They were around €70,000 to €80,000 for 400sqm (4,300 sq ft).Then the question of whether a ground lease is worthwhile is unnecessary.fusselchen89 schrieb:
However, many acquaintances advise us against leasehold.What are their reasons?
HilfeHilfe schrieb:
Leasehold = you pay rent/lease for the land your whole life. The amount is set by the seller. It can make sense in high-priced areas.That doesn’t matter. It’s relatively cheap anyway.
nordanney schrieb:
Additionally, after the lease term ends, you have to give back the house and receive compensation, which usually does not cover the full value of the building.Usually, it gets extended anyway. But that doesn’t really matter since you don’t experience the end if you’ve been there from the start.
2.50€ (about $2.70) … is that cheap?
We pay roughly 3.70€ (about $4.00) … people say that’s expensive… : D
We have an adjustment every 5 years: last year it happened, about 80€ (about $86) more per year, which was manageable.
We live well with the lease payments; in return, our mortgage for the house is relatively low and will be paid off soon.
We probably sleep better with a $200,000 loan than with $350,000.
Through the church is always good. Banks tend to make things difficult with private leasehold agreements.
For the landowner/tenant relationship, it’s the same either way: you feel like an owner and are allowed to do everything like an owner.
N
nordanney16 Jul 2019 21:14Snowy36 schrieb:
But the resale value of such a property is just lowerI have to disagree with you there. Leasehold properties are just as in demand as freehold properties.One needs to understand how churches finance the pensions of their clergy. This is done through pension funds, which are supported by lease agreements on the land. Therefore, churches generally do not sell land, whether it is agricultural land or leased housing. It is very, very likely that after the 75 years the lease will be extended. Why would they want to own the house themselves?