Before the desire to live in their own house, can be realized, the land issue to resolve. This is often associated with significant problems, because most land devour most of the planned capital for house construction. Especially in urban areas, therefore, the procurement of a suitable building ground to a difficult problem solvable. Either the building project will be entirely buried, or it must be made significant compromises in the size and location of the property, so that one would come after all for their own home.
However, there is a solution that has many little known, and avoids the disadvantages described above: the land is not purchased, but acquired a long lease. This can be cheaper than buying, does not lead to the need to increase borrowing, the monthly budget under strain, and often opens up access to attractive building sites.
What is meant by lease and how does it work?
At lease, land for a very long period (usually leased 99 years). The farmer can cultivate the land or bequeath more leasehold, which he acquires the lease contract to sell. The contract can be terminated by either side. It will be notarized and entered in the Land Register. Thus the rights of the tenant which are (one very similar to the so-called owner, land rights "). It is also possible to arrange a purchase right if the tenant later, wants to be real 'owner of the land. For the use of land one rents agreed.
Most will lease by public or nonprofit institutions, such as churches, foundations and municipalities offered. Legally, are more complex to manage contracts with private providers, but occur only occasionally.
How expensive is it? A financing example
To give an idea of what the financial benefits can be associated with a long-term lease to a normal purchase of the land, let us look at an example. The data on land prices and interest rates are here but most realistically chosen, but of course purely fictitious, since a large range available and interest rates and conditions can change quickly depending on economic conditions .. Whether buying or leasing is cheaper, can be judged only on the specific case.
Suppose, for the purchase of land € 50,000 will be needed. Be payable at a rate of 4.8% and 2% redemption € 280 per month for the loan, after about 25 years, the loan would be repaid. Until then, would pay a total of 84,000 € (without loss of interest and without costs of land acquisition, such as taxes, brokerage fees, land registry entries, etc.). If one were to assume a similar property of equal value in the lease, it would be at a rate of 4% to € 166 per month lease expect. After 25 years you would have paid a total of 49,800 €. The lease payments will continue to run though, but the house is free of debt at this point in the rule so that are no longer covered the cost of the land so much weight. In addition, we can arrange a purchase right to acquire the site and if the load is determined by the building of houses slowly lower. As the example shows, the actual saving of credit and lease terms, and depending on the assumed duration of the contracts. In certain situations it may well be that the option to buy the property on credit, is more advantageous.
What should be considered for lease?
The lease usually contains detailed information on how the land should be cultivated. Here one should make the contract as openly as possible so as not to later additions or the construction of a garage as high additional rents due.
When selling the surface rights is always sold with the building, so you can not sell the leasehold separated from the house.
) The conditions for the withdrawal of the rent law by the owner (reversion must be restrictively regulated, otherwise the owner may procure the land cheap, together with the building. Adjustment clauses in the contract can lead to a significant increase in interest rates over the term, are therefore necessary to examine carefully and included in the cost-benefit calculation. Generally, at high interest rates, the benefits of the lease are larger than in a low interest.
Particularly in view of the life-long 'term of the lease term may be the fact that one just yet does not own the piece of ground on which one's own house is proving to be disadvantageous. Therefore, all details of the contract should be - in particular adjustment clauses of the lease amount, purchase rights, development restrictions or rights of the owner to return - will be carefully considered.
The lease will help if only for the lease of a plot, but it is not for sale. Then they should not shy away from taking a careful examination of the conditions -. But it is especially advantageous if the first few years just after the house construction, the liquidity and therefore the debt should be kept low, and in urban centers, where are attractive sites for rare and expensive. There you can come with a long-term lease may still affordable at a construction site