Ground lease building plot experiences?

Good day dear ones :)

I would like to ask for your advice/experience regarding leasehold.

About us:

We, 28 & 26, have been unsuccessfully searching for a plot of land for several years .... unfortunately without success.
The land prices here, in NRW, are very, very overpriced... and an older house from (1945) (plot 400 sqm) does not go for less than 420,000 euros here ... no words.... since I am a mason myself and see what additional costs generally come on top of a renovation, it’s a bottomless pit....
Since we are only looking for a building plot and plan to build the house ourselves.

We have now received an offer for a 550 sqm plot in a good location, as a leasehold, with 4% ground rent, from the municipality, unfortunately a purchase option is not possible :( even after 99 years.

We are calculating and just can’t get any further.....

Should we take the plot? Because recently there are no plots available or affordable?

Or should we wait until the interest rate turnaround 2024 is here?

I would be happy to hear about your experiences :)

Best regards: Franziska & Marcel

Just calculate how much you have to pay each month (4% of what? / fictitious m² price). However, 4% seems a bit much to me. But I guess it won’t be negotiable? We also have leasehold, but had to submit a one-sided purchase offer notarized after 10 years (I don’t care whether it’s leasehold or purchase).

I now know several people who have that too, but mostly from the church, which is the biggest leasehold provider in Germany. There are clauses that adjust the leasehold rent, usually they are okay but better have them checked. There were reports that the leasehold rent was not adjusted for a long time and then multiplied at once, which was no longer affordable... (but those were plots from the church, the clause was related to the increase in land prices, not an increase according to an index (basket of goods)). Leasehold is a bit more complicated, but once you’ve dealt with it, I definitely see no obstacle in it. We also built in NRW (started last year, finishing soon), prices have been skyrocketing for 5-6 years. Plots are not available at all. My 270-year-old hut will probably go on the market in the next few years as long as the prices are still like this :cool:

Or should one wait until the interest rate turnaround in 2024 is here

Enlighten me! Did I miss something? Has the FED/ECB announced anything? o_O

Hello, will you still be alive in 99 years?? If not, you should consider the lease. Which interest rate turnaround 2024 do you mean? I want to speculate.

a 550 sqm plot in a good location

So something you otherwise wouldn’t get.

with 4% lease interest

Is somewhat more expensive than usual. Question: What are the 4% calculated on? We once had a thread here where the municipality only set 1,000€ instead of 1,600€ as the standard land value (no idea if the numbers are correct...).

unfortunately a purchase option is not possible :( not even after 99 years.

That’s really crap if you have to leave the house at ages 125 and 127 ;) . But what the heck, there is money from the municipality since they have to compensate you for the house. You can then spend that calmly...

Or should we wait until the interest rate turnaround in 2024 happens

Who says that? And what if interest rates don’t rise drastically? At the moment there is no indication why interest rates should increase. We in the EU would then have the problem that half a dozen countries would be bankrupt – nobody is interested in that. Just one of many reasons why interest rates won’t rise drastically. And even a doubling of interest rates from 1% to 2% is not, for me, a turnaround since it’s still historically cheap.

Should we take the plot? Because recently there are no plots anymore or they are affordable?

You have to decide that. The alternative is that you wait. For rising construction prices, rising plot costs. Or maybe for falling prices? Who knows. But it won’t get much cheaper.

The heritable building right lease amounts to 4%. The plot is 550 sqm. The standard land value is 190 euros. According to my calculation, it would be 348 euros per month. 550sqm x 190€ = 104,500 €. Of this, 4% is 4,180€ per year. 4,180 euros ÷ 12 months equals 348 euros ...... With a life expectancy of 80 years, it would be 52 years and thus 217,152 euros. After that, the plot still does not belong to me ......