ᐅ Land Value in Financing – How Is It Calculated?

Hey everyone!

For our house construction, my father wants to transfer or gift me a part of his property.

This will be measured and transferred from the former farmhouse.

Of course, it will be officially recorded by a notary, etc.

This land is planned to be used as equity for the mortgage with the bank.

How does the bank determine the value of the land? Do they strictly use the official land value (land reference value / land registry value), or do other factors come into play?

There will definitely be a value stated in the gift deed, right? The tax authorities are interested in that as well. It will be the value that the bank uses for their assessment.

Yes, the land value benchmark is certainly a good starting point.
Is construction allowed there? A former farm sounds like it could be in an outlying or non-urban area.

It is "risky," but our architect is handling everything. The kind man from the building authority has already visited the site, inspected everything, and said he will write his report in a way that it will probably work out.

Well, no tax is due up to €400,000, right? And he can’t determine the value himself anyway...

The standard land value is of course not that high at €25 per square meter (approximately $2.75 per square yard).

Well, the bank probably won't value it any higher, and possibly even lower. It might also be harder to sell if it's more of a family-related matter.

For now, expect about €25 per square meter (approximately $27 per square yard); that won't make much difference for the loan-to-value ratio.

It depends on the size 😉 I think 2000m² (21,528 sq ft) should definitely help quite a bit.