ᐅ Leasehold land including new construction

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

Leasehold = you will pay rent/lease for the land for your entire life. The amount is known by the seller. This can be worthwhile in high-value areas.

fusselchen89 schrieb:

However, many acquaintances advise against leasehold.

Why?

fusselchen89 schrieb:

What are the general experiences with leasehold?

It’s a common practice, especially in the Ruhr area.
Advantage: You don’t have to buy and finance the land.
Disadvantage: You’re basically renting the land; whether it’s more expensive or cheaper than buying depends on the leasehold terms. Additionally, at the end of the lease term, you usually have to give the house back and receive compensation, which generally does not cover the full value of the house.

fusselchen89 schrieb:

What ongoing monthly or annual costs would we have besides the mortgage payments?

The same costs you would have as a tenant.

You pay about €2.50 per square meter, which is around €1,000 per year or €83 per month. With that, and assuming 2% interest and 2% principal repayment, you could finance roughly €25,000. Can you get fully serviced plots for that price?
Let me guess: you live in a very rural area...

Is the lease payment fixed or variable? 2.5 times 400 would be 1,000 in rent per year. Bearable, but not nothing. Calculate 40 years ahead, then it is almost nothing.
What happens after 75 years? Then you will be deceased, but your heirs will have to deal with it. The church could reclaim the property, but would have to compensate the heirs for the house. They could also extend the lease, but the conditions would be unclear.

That is a very cheap ground lease. The plots of land can’t be expensive either then, right?

In your early 30s, you can confidently expect the term to be 75 years instead of 80 or 99 years.

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