ᐅ Buy an old house, keep the land, sell the house, build a new house

Hello Homebuilding Community,

I’ll try to keep this brief as it’s a relatively complex project. My family and I want to buy a house, divide the land, resell the existing building along with part of the property, and then build a new house on the remaining land.

The semi-detached house is located in a suburb south of Kempten and will cost 280,000 plus real estate agent fees. It was built in 1968, has about 100m² (1,076 sq ft) of living space, a 475m² (5,114 sq ft) lot, windows from 1980, a gas heating system from 1997, is partly clad with asbestos cement panels, bathrooms need renovation, and the roof was insulated and converted amateurishly.

It’s already clear that building on the property is allowed, so that should be fine.
The problems and uncertainties are:
- We do not yet have a valuation report for the house
- What additional costs should we expect (taxes on the sale, property tax on the purchase—even if only part of the land is kept, capital gains tax?, subdivision costs, etc.)
- We have an advisor who has already checked whether building on the “remaining land” is possible, but he is focusing too much on the new construction, even though we can only deal with the new build after the semi-detached house has been sold
- How can we finance the temporary ownership of the house (flexible loan with later conversion into a “normal” mortgage)
- Where might there be hidden costs that we haven’t listed yet?
- As we move forward, significant costs are already coming up (reservation fees, advisor fees, notary costs for contract drafts, etc.), which would all be lost if we decide against this “model” at a later stage

An additional problem is that the sellers are only prepared to reserve the property for us for a limited time, AND we leave for our annual vacation the day after tomorrow, not returning until shortly before the signing deadline at the notary.

As you can see, it’s quite tricky. If we hadn’t already been searching for so long (a house, semi-detached house, land, anything), we’d probably cancel immediately. This is our first somewhat realistic chance to build here… (land is simply not available in this area).

That’s enough for now…

I look forward to your opinions, recommendations, and assessments!

Greetings from the Allgäu

Florian

Hello,
is what is marked in red your building request?

Are there any official documents confirming that the plot can be divided? And what kind of development would be permitted (building permit / planning permission inquiry)?

How is it supposed to work to divide something on 480m2 (5167 sq ft) and maintain proper spacing between areas?
And the annual vacation comes so suddenly that a decision involving a lot of money also comes unexpectedly.

And honestly, who buys a plot of land that is well under 300 sqm (3,230 sq ft)?

Hello Florian,

I would be surprised if the development you planned is permissible. Does house #10 on the west side have no windows or openings? Even if it is completely closed off, the building usually must have a 3-meter (10 feet) setback from the property boundary. Your garage would then have to be placed beyond that, so everything would need to be shifted 3 meters (10 feet) to the west. Alternatively, you could build directly onto house #10 if that is technically feasible.

The narrow, elongated plot with the resulting “mid-terrace house” will naturally lose significant value. The condition of the house and the official land value would be interesting to know.

In any case, this is not a purchase to make hastily or without thorough consideration. From my point of view, this approach won’t work, so you first need to find out what type of development is actually allowed.

Best regards,
Dirk Grafe

Maybe this is only possible with a condominium subdivision? I’m adding a question mark because I have no idea how the legal situation applies in your case. Your "advisor" (financial advisor? building consultant? someone else?) says that building is allowed, but it’s not very clear here how exactly construction is permitted and how the subdivision should be carried out. There is, however, a huge difference between a physical subdivision (which here at least requires minimum sizes for the remaining plots and also compliance with setback regulations) and a condominium subdivision, which I personally would never buy and which probably also significantly reduces the purchase price of the land shares—especially if the buyer learns that construction will still take place.

I wouldn’t rush into this under pressure and with all these ifs and buts (including the unpredictable cost factors), but rather enjoy the vacation and then return refreshed, having slept on it multiple times, to tackle the matter again.