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
I don’t like leasehold either... If everything else around it had been right, I probably would have accepted it, but when you have a choice and the necessary funds, most people prefer freehold plots, as this discussion also shows.
Is that rational... Probably not. Emotionally, it just doesn’t feel like it’s completely your own, but rather partly rented... Does that affect living in the house... No, if you don’t have an emotional issue with it. I do have one... why? I can’t explain it rationally.
Is that rational... Probably not. Emotionally, it just doesn’t feel like it’s completely your own, but rather partly rented... Does that affect living in the house... No, if you don’t have an emotional issue with it. I do have one... why? I can’t explain it rationally.
N
nordanney17 Jul 2019 10:36guckuck2 schrieb:
Try selling your house on a leasehold basis, say listed for €400,000, and then explain to the buyer that they can’t get the full mortgage amount. I still don’t understand the issue. Where is the problem? Leasehold rights are common practice.
Just tell that to buyers of freehold properties who suddenly have to pay €600,000 instead of €400,000 because they have to buy the land as well. They need to bring in significantly more equity. In fact, you actually have more potential buyers for leasehold properties than for freehold, since the equity requirement is much lower!
guckuck2 schrieb:
It backfired on some former neighbors; the sale was considerably more complicated. I currently live in a residential complex on leasehold land. Buying and selling here happens routinely. Even for apartments! And financing is available as well.
N
nordanney17 Jul 2019 10:37Tego12 schrieb:
I don’t like leasehold eitherThat's right, it’s about the “feeling.” In reality, there is no difference in usage compared to full ownership.nordanney schrieb:
I still don’t understand. Where is the problem? Leasehold rights are routine business.
Try telling that to buyers of full ownership, who suddenly have to pay €600,000 instead of €400,000 because they have to buy the land as well. But that is not the starting point.
The starting point is a real estate listing for €400,000. Interested parties contact the seller, searching for properties within that price range.
Then they are told they need 20% equity because the ground lease provider requires it.
This has to fit into the buyer’s plan.
This happened in the former neighborhood where the grandmother left the house, and several young interested buyers dropped out because they don’t have €80,000 (about $88,000) available. They do have additional costs and the kitchen paid in cash in their accounts.
N
nordanney17 Jul 2019 14:43guckuck2 schrieb:
They are then told they need 20% equity because the ground lease holder doesn’t allow otherwise In my 25 years of real estate financing experience (and hundreds of ground leases), I have never seen a ground lease holder impose such requirements. They only need to approve the sale (which they can’t really prevent). Otherwise, the land is treated as full ownership.
guckuck2 schrieb:
This happened in the former neighborhood where grandma moved out of the house and several young prospective buyers backed out because they didn’t have €80,000 (about $85,000) available. They had additional costs and the kitchen cash on hand. I would bet that the €80,000 (about $85,000) is not based on any demands from the ground lease holder. The only possibility I can think of is that the ground rent had to be paid in full in advance, and in the situation you described, an increase due to the sale was possible and had to be paid upfront.
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