Leasehold / Ground lease

The leasehold (in German: Erbbaurecht/Erbpacht) is anchored in the German Erbbaurechtsgesetz (ErbbauRG).

The leasehold allows you to buy a house without a plot of land. The land and the property then have two different owners.

The advantage: The purchase price is lower. The real estate owner can use the property entirely and exclusively by paying ground rent.

But — and here comes the catch — as a property owner, you are also obligated to pay all costs incurred for the property. These are, for example, the real estate transfer tax or possible development costs for electricity, water, and the Internet. In addition, you should carefully check whether the ground rent is really lower than the conditions for a construction loan before buying. Depending on the duration of the leasehold contract, the interest rate may be valid for up to 99 years.

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