Purchase of a leasehold property - price negotiable?

Hello everyone,

In 2005 we bought and moved into our single-family house in Dortmund. Due to our financial situation at the time and because we liked the location and the property, we decided to buy the house despite the leasehold land that lasts until 2057. The leaseholder is Vonovia and the leasehold rent is extremely low, as we currently pay only about €65 per year for the 520 sqm plot.

Now we are considering purchasing the land itself due to the continuously rising land value standard. Additionally, with the purchase of the land we would have more freedom in choosing the financing and could obtain a cheaper loan through refinancing, thus recouping part of the purchase price of the land through lower interest payments on the original loan.

Now to my question:
An initial inquiry to the leaseholder has been made and we have been given an offer. According to Vonovia, a formula is used to calculate the purchase price, which is based on the land value standard, plot size, duration of the leasehold contract, etc. The offer was about €30,000 below the pure land value standard. Now we are wondering if the purchase price is negotiable or if there is anyone who has experience with Vonovia or another leaseholder when buying a plot of land? Our hope is that Vonovia is open to negotiations and willing to negotiate, also because of the very low leasehold rent.

How do you assess this?

We are also wondering who should conduct the purchase negotiations with Vonovia? Ourselves? The current bank (which is to be replaced by another bank), the new bank, or a mortgage broker like Interhyp/Dr. Klein?

Many thanks in advance for your answers!

We are also wondering who should conduct the purchase negotiations with Vonovia?

The one who wants to buy.

The offer was about €30,000 below the pure standard land value.

That’s great! Considering that plots are sold at market value, which is often higher than the standard land value, and the offered price is still below that, you can be happy. Of course, you can also ask if it can be cheaper, but we are not the decision-makers.

Moreover, with the purchase of the plot, we would be more flexible in choosing the financing and could conclude a cheaper loan through refinancing and thus recoup part of the purchase price of the plot through lower interest on the original loan.

I don't understand why you are more flexible in the choice. I also don't understand why you save money through refinancing? You are not selling the house and therefore have no right to terminate. If the bank agrees, there will be a considerable prepayment penalty.
Or do you want to terminate under § 489? Then I don't understand why you haven't done this independently of the plot purchase yet.

The offer was about €30,000 below the pure standard land value. Now we wonder if the purchase price is negotiable

With Vonovia, I don't see any room for negotiation. Take it or leave it. Although, of course, you should always try.

We also wonder who should conduct the purchase negotiations with Vonovia? Ourselves?

Who else? You are the only ones interested. Nobody else cares.

Thank you for the quick response. Of course, 30k is already a substantial saving and at the same time we wonder if even more is possible. I also understand that the decision-makers about the purchase price are not here in the forum :D My hope is simply that others have already successfully negotiated with a leaseholder and were able to lower the purchase price.

It is also clear to me that the decision-makers about the purchase price are not here in the forum :D My hope is simply that others have already conducted successful negotiations with a leasehold provider and were able to push down the purchase price.

Your problem is that it is not Vonovia who wants to sell, but you who want to buy. Vonovia is under no pressure and can sit back. Maybe they will even come up with the idea that the ground rent should be properly increased/adjusted (because this has been neglected or overlooked so far) after you have made contact there and in the end do not buy after all.

Well below the standard land value. What is there to consider.

It's better for any loan if the property belongs to you.