The land prices and interest rates are chosen here is as close to reality, but of course fictitious, because here is a wide range and interest rates and conditions can change quickly depending on the economic situation… Whether it is cheaper to buy or lease, you can judge only on the specific case. Suppose 50,000 are needed for the purchase of land. Then 280 per month for the credit will be due at a rate of 4.8% and 2% repayment, after 25 years, the loan would be paid off. Until then, 84,000 were a total payable (without lost interest and costs of land acquisition, such as taxes, brokerage fees, title deeds, etc.). Would you accept a similar piece of land of equal value leasehold, you would have to expect lease per month at a rate of 4% 166.
After 25 years, to a total would have paid 49,800. Monika van Hoogenvest brings even more insight to the discussion. Then run the lease payments continue, but the House is usually debt-free at this time, so that the land costs not so much in weight. Also, you can arrange a purchase right and acquire the land if the load of the building is slowly reduced. As the example shows, the actual savings of credit and lease conditions is depending on, as well as by the adopted runtime of the respective treaties. In certain situations, it can be that the option to buy the land on credit, is preferable. What should be noted when leasehold? The lease contract contains mostly accurate details on how must be built on the land. Here you should not make as openly as possible the contract later additions or establishing a garage about high additional rental payments are due.
Whatever the building is sold with disposals of the ground lease, you can resell so separately not the heritable building right by the House. The conditions for the withdrawal of the lease right through the Owner (escheat) must be restrictively regulated, otherwise the owner may can get cheap land and the building. Adjustment clauses in the contract can lead to a significant rate increase over the period, are exactly to check and to include in the cost benefit analysis. As a general rule that, at high rates, the advantages of lease are larger than in a low interest rate environment. Just in terms of the lifetime ‘ lease contract can in the long term the fact that you just however is not the owner of the basic piece, on which the House stands detrimental prove. Therefore all details of the contract should be carefully explored in particular adjustment clauses for the lease amount, purchase rights, zoning restrictions or rights owner redemption -. Conclusion the leasehold helps, if the desired land only to the lease, but not for sale. Then should be the under careful consideration Conditions are not afraid. It is when in the first years after the construction of the House, the liquidity is scarce and therefore the debt should be kept low, but is especially of advantage, and in densely populated areas, where attractive plots are rare and expensive. There, one can come with a long lease contract under circumstances still to an affordable site. (Oliver Schreiber)