ᐅ General Questions (Leasehold)

alwayssearchin schrieb:

Building a multi-family house

Ouch. With a landlord who’s a scaredy-cat, you can pretty much only shoot yourself.

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Tarnari schrieb:

It’s not uncommon for there to be no adjustments for years, followed suddenly by a significant increase. I once heard about an elderly lady who paid the same interest rate for decades and then had to pay around 300% more overnight.
But that’s probably just something from sensationalist news.

No, this is not a myth, it’s quite normal where ground leases are common. This is one of the major risks with leasehold properties. You have to factor the increase into your budget every year or at least keep it in mind. Some have forgotten this clause and now face financial ruin in their ground lease homes in old age, as they can no longer afford it.
It gets even “better” when the ground lease needs to be renewed and suddenly 4% p.a. of the current land value is applied. What once was a bargain quickly becomes a nightmare.
It should be remembered that the ground lease is an instrument from the Imperial era—consumer protection is basically non-existent. Making an extension to a house without the ground lessor’s approval can already be difficult. With a new build, this might still be justifiable, but 60 years later, or when a sale of an existing property is due, the situation is different—1919 + 99 years—the issue is only now coming to light.

BackSteinGotik schrieb:

No, this is not a rumor, but quite common where ground leases are widespread. And this is one of the major pitfalls with leasehold properties. You have to factor in the annual increases in your budget or at least keep them in mind. Some people have forgotten this clause and now face losing their leasehold home in old age because they can no longer afford it financially.
It gets "better" when you have to renew the ground lease, and suddenly 4% per year on the current land value becomes the basis. What seemed like a bargain quickly turns into a nightmare.
It should not be forgotten that the ground lease is an instrument from the Imperial era – consumer protection is hardly built in. Simply adding an extension to a house without the lessor’s permission can already be difficult. Maybe still manageable with a new build, but 60 years later, or when a sale from existing stock is due, the situation is different – 1919 + 99 – this issue is only now coming to light.

That may be. Quite possibly even.
There are areas where land simply isn’t available, and if it is, it costs as much as the house that goes on it. Existing houses from the 1980s with oil heating cost €600,000 plus.
So this might still be an option.

We are building entirely with equity. We see it like rent. If it ever stops working, the place will be sold.

Good evening,

nordanney schrieb:

You are completely wrong.

Well, that seems to be your opinion, because for me, the mere possibility that expropriation could happen does not reduce the likelihood to zero.

nordanney schrieb:

You would suffer no loss! (except for a move – but then you would have a new house)

Moving is not exactly easy, especially when you consider that the purchased plot, after more than 100 previous questions (and Matthew was already helpful during the process), should really have been the final destination.

nordanney schrieb:

Both land options carry exactly the same risk. There is no difference.

Isn’t it typically the case with a leasehold property that the house can remain on the land for around 100 years, and afterwards the landowner has the right to acquire the house? (Let me guess, if the answer is yes, then I get the market value?)

Matthew03 schrieb:

You are only getting in your own way and blocking any potential desire to build a house. All kinds of prospective builders weigh things up...

How do you know that I am getting in my own way with these considerations (whatever kind they may be) when the considerations are about purchasing a plot of land?

How do you also know that I have not already asked myself most of the questions you mentioned?

Best regards

alwayssearchin schrieb:

That’s your opinion, then, because just the possibility that expropriation could happen doesn’t reduce the probability to zero for me.

Then you shouldn’t build anywhere in the world (especially in other countries). Also, you shouldn’t own any assets at all. Expropriation doesn’t only apply to land. Otherwise, please study the legal texts. You are addressing such an important topic that it is even enshrined in the constitution. And if you see the probability as greater than zero, then I really feel sorry for you. No trust left in our government? Or do you personally know so many people who have already been expropriated?

alwayssearchin schrieb:

Well, moving isn’t exactly easy when you consider that the purchased plot of land was meant to be the final stop after more than 100,000 previous questions (Matthew was already helpful during the process).

Those 100,000 questions are your problem. The average homebuilder asks far fewer and focuses on the location. This alone allows them to avoid expropriation with the first and most important question. They simply don’t build in rural zones or where railway lines, airports, or highways are planned. They focus on the really important matters.

alwayssearchin schrieb:

Isn’t it usually the case with a leasehold that the house can stand on the land for about 100 years, and then the landowner can acquire the house? (Let me guess: if the answer is yes, I’ll get the “market value”?)

The answer is yes and no. Usually, there is a clause that allows the leaseholder to extend the leasehold. Alternatively, an agreed compensation amounting to a certain percentage of the market value is paid. It’s basically a buyback – but the leasehold grantor must come up with the money to buy an aging property. And if suddenly 150 leaseholds expire in a development area, it becomes an expensive affair. The original builder is long dead by then and enjoyed their “land lease” because otherwise, they wouldn’t have been able to build.

alwayssearchin schrieb:

How do you know I’m standing in my own way with these considerations (whatever kind they are) when they’re actually about acquiring a plot of land?

Isn’t that just a rhetorical question based on your posts? If you’re already asking questions about the type of land and obsessing over expropriation—which simply doesn’t occur in normal areas in Germany—it seems you’re making this more complicated than necessary.

P.S. I have one more curious question. It’s not related to leasehold. Do you own any securities (especially stocks or equity funds)?