Construction on someone else's property with subsequent purchase

Hello,

unfortunately, I couldn't find anything suitable, so here is my own topic. If there is already a corresponding thread, I would appreciate a link :)

We (a family with one child) have been looking for an affordable plot of land for some time for the dream of owning our own house southwest of Berlin in Brandenburg. The land prices have skyrocketed to dizzying heights since the outbreak of Corona, and we are not willing to spend any nonsensical sums. Now, through a good acquaintance, we might have the possibility to acquire a buildable plot (with an old bungalow to be demolished made of stone/wood as well as some trash) from her relatively cheaply for construction. So far, so good.

Now to the problem: Our acquaintance bought the plot herself about 5 years ago under significantly cheaper conditions and would still make a good profit for us with a sale price of, for example, €80 per m², which we wholeheartedly absolutely wish her. However, she wants to sell to us only after the 10-year speculation period has expired (so as not to have to pay 40% tax on the profit) and therefore suggested the idea of a lease with subsequent purchase so that we can fulfill our dream of owning a house.

What do you think of such a model?

- Are there any experiences here? If so, possibly even sample contracts that define everything legally securely?
- Could there be problems if the lease is "very low"?
- Can it be contractually agreed that we will definitively take over the plot at a fixed m² price in 2027?
- Are we as lessees also "owners" to a certain extent?
- I am also wondering how this works with the house construction and financing for the house, is that even possible?

In our research, we have only found examples of hereditary leases, which usually run for 99 years. However, we want to buy the land as soon as the speculation period for our acquaintance is over.

Please excuse the many questions, but we are somewhat confused about the topic. :)

Best regards and thanks in advance, Alex & Family

Which bank gives you the money without the security of a mortgage?

Who currently lives in this house? The seller, then there are no speculation taxes.

Why don't you simply cover the costs incurred if the property is so great?

Which bank gives you the money without the security of a land charge?

That is part of the question. So whether a "leasehold" works with a new build of a house and the corresponding financing. So far, we have been trying to find appropriate answers on the internet, but much of it contradicts itself. Sometimes it says that it only works with a hereditary lease, then again not, etc. The form basically does not matter to us; it just has to work. Hence the question, whether there are any experience reports / opinions here. :)

Who currently lives in this house? Then there are no speculation taxes from the seller.

No one, the property has been uninhabited for quite some time and the small house is rather dilapidated. We would therefore demolish it, especially since it is relatively far back on the property and we would like to build with the appropriate distance (5m) from the street. The "seller" lives on her neighboring property.

Why don’t you just cover the costs that arise if the property is so great?

We would be willing to do that too, but she absolutely wants to sell only after the speculation period expires.

- Are there any experiences here? If so, possibly even standard contracts that legally define the whole thing?

Standard lease contract

- Could there be problems if the lease is "very low"?

Only for the lessor

- Can it be contractually agreed that we will take over the property in 2027 at a fixed price per m²?

Have a notarial contract drawn up already. Purchase option.

Are we as lessees also "owners" to some extent?

No, the house and land then belong to the lessor!!!

- I also wonder how it works regarding house construction and financing for the house, is that even possible?

Yes, that is possible. Then the lessor must have the property encumbered with a land charge.

Now to the problem: Our acquaintance bought the property herself about 5 years ago at significantly better conditions and would still make a good profit for us at a sales price of e.g. €80 per m², which we sincerely and wholeheartedly wish her. However, she only wants to sell to us after the 10-year speculation period has expired (to avoid paying 40% tax on the profit) and therefore suggested the idea of a lease with a subsequent purchase so that we can fulfill our dream of owning our own house.

Honestly. What amounts are we talking about? Pay the taxes to the acquaintance on top as a price and that’s it. With 1,000 sqm of land, we are talking about a land price of €80,000. Even if the acquaintance only paid €40,000, maybe €35,000 profit remains. With his top tax rate of 40%, that’s about €12,800. Pay it and enjoy the property.

- Can it be contractually stipulated that we take over the property in 2027 at a fixed price per square meter?

Have a notarial contract drawn up already now. Purchase option.

It would not be possible to regulate this bindingly already now in the notarial contract, since the dates of the notarizations are decisive for the calculation of the speculation period.

Honestly. What amounts are we talking about? Just pay the taxes to the acquaintance as an extra price and that's it.

I see it the same way! If you are actually talking about purchase prices of 80€/sqm here, I would simply add the difference on top.

First of all, thank you for your answers. As mentioned: basically, we would also add the difference on top, but so far our acquaintance has opposed this. However, it would of course be the simplest and most sensible option. I will talk to her again about it.

It is important to us – if she cannot be persuaded – that the house to be built is our property and that the bank does not raise an eyebrow because of the "foreign" property, so that financing the house is still possible without problems. For the plot of land, we would set aside the corresponding amount from our equity capital until the purchase opportunity arises.