Construction financing without land charge registration - what are the options?

Hello everyone,

I am new to such forums, but maybe someone can help me. My wife and I live on a leased property that belongs to a weekend and holiday home area. Currently, there is a small house on the property with about 65 square meters – but I would like to build new because we are also planning a family someday. But that is exactly where the problem lies. I am not the leaseholder, but an association is – that means I am only a sub-lessee (so there are two lease contracts) – a land charge registration for a loan is therefore not possible. The contracts cannot be changed either, I have already tried that...

I have already been to several banks, but all say the same thing – without land charge registration, construction financing is not possible. But isn’t there any way? The loan amount would be around €200,000. My wife and I both earn well – equity capital is currently about €30,000. So it really is not about creditworthiness, but only about these annoying lease conditions.

If the question arises now why we don’t just move somewhere else: The property is located by a lake in the middle of nature. You won’t find anything like that again.

I look forward to all responses that can hopefully help me.

Thank you TT

Unfortunately no answer that will help you. 1. Financing a house in a weekend and holiday home area is per se a very difficult undertaking (leased land - not even ownership or hereditary building right! What is allowed to be built there? Permanent residence? Who would buy such a "holiday home" in the holiday home area? etc.). Even with a land charge only very few banks do this. 2. Would you (if you were a bank) give a loan WITHOUT SECURITIES of €200,000? If you find a reason for a YES, you will also find a bank (e.g. annual net income €1 million, pledge of securities over €250,000 etc.). Sorry, either stay living small or move. But then a new build will not be possible, because you will not be able to build in the desired family size with €200,000 (+ equity).

So the plots/parcels are very popular there – a house was sold a few weeks ago for €120,000 that doesn't come close to the comfort of our house. So the demand is there, but I know that would have to be made clear to the banks. Permanent residence is allowed.

As securities, we would have "only" private guarantors – but no real security (as it's nicely called).

that would have to be made clear to the banks

The bankers do understand that you can live there.
However, they will not finance you - at least not without a land charge.

P.S. In case you could lease directly: The lessor would be more than foolish to allow you to register a land charge on his property. You don't pay back your loan and the bank auctions HIS property (you do not own it). By the way, he then also owns the house, since it is connected to the property.

Have you asked the building authority whether your project would be permissible under building regulations? You probably want to build bigger/higher than the existing structure...

I also doubt that neither a massive enlargement, an increase, nor other changes dependent on the development plan are allowed. Weekend and holiday home area already says a lot. That falls under recreational area... Otherwise, every allotment garden association cottage owner could just put a small villa with parking spaces for vehicles among tenants seeking peace - what a horror!