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Cheaper living with heritable building rights? Those are the pros and cons


The construction costs are still high in Germany and the interest rates continue to rise. Is heritable building right a cheap solution for builders?

The construction costs are still high in Germany and the interest rates continue to rise.

Is heritable building right a cheap solution for builders?

Hanover – In times when building plots are not only becoming rarer but also increasingly expensive, private builders are increasingly considering alternatives to buying plots of land.

One of them is the heritable building right, in which one's own property is built on a plot of land that has been leased for several decades.

The model offers advantages and disadvantages that consumers should weigh up against each other, as reported by


Cheaper living with heritable building rights?

Those are the pros and cons for builders

The concrete structure of heritable building rights is regulated by the nationwide heritable building law (ErbbauRG).

The basic idea is simple: a property owner leases the property that belongs to him to the client, the so-called heritable building owner.

This pays the so-called leasehold rent for the use of the property and in return may build a property on the land of the owner.

The contract concluded between the owner and the leaseholder regulates how long the heritable building right applies.

In practice it is often 99 years.

At the end of this agreed lease period, the property of the building erected on the property becomes the property of the property owner.

If those entitled to heritable building do not fulfill the stipulated contractual obligations, the property owner can also make use of the so-called reversion claim before the end of the agreed period.

"The property owner can then request the transfer of the heritable building right to himself and the surrender of the property," says lawyer Natalie Kaestner from the working group on construction and real estate law in the German Lawyers' Association.

This can be the case, for example, if the payment of at least two annual amounts of ground rent is delayed.

Cheaper living with heritable building rights?

The advantages of heritable building rights for builders

The advantage of a heritable building right for builders is obvious: Because the purchase and the associated financing of your own building plot are no longer necessary.

Builders who are thinking about the alternative hereditary building right should compare in individual cases whether the hereditary building right is cheaper than financing their own property, advises the Bavarian consumer advice center.

The heritable building law protects those entitled to heritable building rights for the entire lease term, provided the agreed interest is paid on time.

Lawyer Kaestner says that even if the property is foreclosed on, the right to build and the property that has been built will remain unaffected.

Building permits continue to fall sharply

Wiesbaden – The decline in building permits for apartments in Germany has continued rapidly.

In November, the construction of 24,304 apartments was approved, a good 16 percent less than in the same period last year, the Federal Statistical Office announced on Wednesday in Wiesbaden.

From January to November, 321,757 apartments were approved, a drop of 5.7 percent compared to the same period last year.

The decline in single-family homes was particularly strong (minus 15.9 percent).

The number of building permits is an important indicator in view of the housing shortage in many cities.

However, approved apartments are often not built at first because craftsmen and construction companies do not have the capacity.

The sharply increased prices for building materials and building land are also slowing down.

The prices for the new construction of conventionally manufactured residential buildings in November increased by almost 17 percent compared to the same month last year.

Federal Building Minister Klara Geywitz (SPD) recently admitted that the traffic light coalition will miss its target of 400,000 new apartments per year.

Because of higher interest rates on loans and high construction costs, many builders are holding back on projects or canceling them.

The Central Association of the German Construction Industry (ZDB) expects around 245,000 apartments to be completed in 2023.

On Wednesday, among other things, he called for a reduction in land transfer tax and an expansion of special depreciation in new social housing.

The Main Association of the German Construction Industry (HDB) lowered its forecast for residential construction.

He now expects 250,000 homes to be completed this year, 25,000 fewer than previously expected.

In view of the housing shortage, an alliance of tenants' associations, building unions and social and industry associations recently called for a special fund of 50 billion euros for social housing.

Around 700,000 apartments were missing in Germany, it said.


Leaseholders can freely dispose of the property insofar as they do not let it be neglected.

However, as with other contracts, the exact conditions are freely agreed between property owners and tenants.

The agreements depended heavily on the wishes of the contracting parties, says Jörg Kosziol, board member of the Munich building association.

However, the greater the desire for flexibility, the more likely financing is to be preferred to building leases.

Cheaper living with heritable building rights?

The disadvantages of heritable building rights for builders

But heritable building rights also have pitfalls.

For example, the right expires after the agreed time and the property and the property built on it pass into the possession of the owner.

The latter is obliged to compensate the previous leaseholder for taking over the property.

However, he does not have to pay more than two thirds of the market value of the property.

According to the Bavarian consumer advice center, this can lead to noticeable losses compared to a conventional real estate sale, especially in metropolitan areas.

The banks also knew this and therefore tended to offer poorer financing conditions for building leases.

The following applies: the shorter the remaining term of the right, the further the willingness to finance decreases and the higher the interest rate.

As the owner of the property, leaseholders basically have sole power of disposal over the building, says Jörg Kosziol.

However, if you decide to sell, the heritable building right on the property usually reduces the sales value considerably.

Leasehold rights are valued based on the provisions of the Valuation Act with fixed discount factors over the remaining term.

Cheaper living with heritable building rights?

Case-by-case assessment always makes sense

In addition, the ground rent can also be increased during the term.

That's why Merten Larisch from the Bavarian consumer center advises caution even if the dream of owning your own home only seems tangible with the help of a heritable building right.

Whether the heritable building right is really an alternative to buying a plot of land, everyone has to evaluate for themselves on a case-by-case basis.

The advantages and disadvantages can hardly be weighed up for the general public.


Source: merkur

All life articles on 2023-01-27

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