The ads for the sale of foreign real estate are common terms for freehold and leasehold. They mean that in the first case the land under the property owned, in the second - in the lease. Accordingly, the status of leasehold landlord imposes certain obligations. On the other hand, the object on the leased land may be cheaper.
The practice of leasehold appeared in the Middle Ages - then still under the feudal system, land in Europe were divided between the monarch and aristocratic families. Now the largest landlords serve the municipality or the state (or land are municipal and federal), less church. In Britain, most of the lands owned by the Queen. Some sites that bought the property, have the status of freehold, but where it failed to do, housing is sold in the status of leasehold, which assumes long-term lease and regular payments. In England, the minimum period of 99 years, maximum - 999 years. In Germany, for residential real estate term of the contract on the ground at its conclusion can not be less than 75 years and up to 99 years for a commercial - 40-50 years. In London, cites the example of Helen Yurgeneva, director of real estate company Knight Frank, the residence of Cornwall Terrace value of 25 million pounds (the most expensive in the area of ??Regent's Park) sold long-term lease for a period of 125 years, and the most expensive in the world of square meter residential complex One Hyde Park near Hyde Park, where apartments cost from ? 10 million - for 999 years.
"In Germany the development of such schemes has been associated with the spread of the program" Affordable Housing ". The investor receives a portion of the land and funding for the construction of an apartment building, where the encumbrance was going restriction of rent, with the condition of the objects sold on leasehold. As a result, citizens with a minimum income could afford a decent living "- says Yulia Kaynova, a leading expert Century21 Beverlywood Realty. In the U.S., is also common system leasehold, but there is in most cases, the land belongs to private individuals and at the end of the lease goes into their property. "In Spain there is only a freehold, and even the planning of using borrowed funds to contract with the bank has always stated that the applicant must own the land (bought for my money) and paid the draft and 10% of the loan amount, - says Yu Kaynova. Foreigners owned housing on the basis of freehold in the U.S. and most EU countries, Turkey, UAE, etc. But in Southeast Asia to non-residents can not buy property in principle. "This, however, does not prevent a huge number of foreign investors to invest in local markets", - said E. Yurgeneva.
Whether large payment?
Owners of most residential properties in England have to pay an annual rent of land, which is established landlord and varies from locality to locality, and the sums are from very cheap to very solid. For instance, cites the example of Helen Yurgeneva, in the London apartment complex Bezier amount is about 600 pounds a year and recorded in the sales contract. In Germany, rents at the rate of 4% of the cost of land rises every three to five years by 3-5%. «Leasehold beneficial primarily for citizens with low and middle incomes, particularly for the construction of the house, - said Yuri Kaynova. - Outside of this scheme to build something, you first need to purchase the site. Then the bank will provide credit under 3,75-4,5% per annum. And he took the same ground rent, people will pay 4% per year. If you have small children, the fee is reduced by 1%, and if the family consists of five persons, the discount will increase to 2,5%. Thus, renting is often cheaper than mortgage payments. At the same time, introducing a fee for the land in the future leasehold-party agreement has priority right of redemption on the objective value assigned to an official appraiser.
For example, in Berlin, the owner of the seven-story apartment house built in 1981 (12 apartments) pays for the lease of an area of ??212 square. m the municipality - the owner of the land 5.8 thousand euros per year. In this case, according to Yu Kaynova, the object brings 74 thousand euros of net income. In Los Angeles, owner of one-bedroom apartments of 82 square meters. m in a condominium, located in a prestigious area, only for the lease of land will be giving $ 750 a month, and yet still need to pay utility costs and maintenance of the fitness center, pool cleaning and maintenance of communal areas - about $ 200. Varieties of leasehold found in Thailand and the Maldives, where foreigners can not acquire ownership of land, but only rent through the company.
Reduce the price factor
In England, the need to rent the land sometimes substantially corrects the value of the property. Especially important to consider the term leasehold. "For example, if you find apartments in Mayfair area of ??50-60 square meters. m for 300-400 thousand pounds, it obviously leasehold. Need to find out when the right to lease expires. Likely in the next 5-12 years, which means paying a minimum of 300 thousand pounds after the deadline - E. Thain said. - Here is a concrete example: in the area two-bedroom apartment worth 360 thousand pounds. Leasehold contract ends in five years. Its extension to 150 years to pay about 500 thousand pounds. " But the above-mentioned apartment in Los Angeles lease expires in 20 years, but now this house is 30% cheaper than analog, "says Yu Kaynova.
On the other hand, the status of land can not affect the value, if the time to renegotiate the contract, said E. Yurgeneva. The rules extension sets the owner. If, before the end of the term remains 60 years, the procedure will cost approximately 10% of the cadastral value of the object. You can try to negotiate a more comfortable environment, but more and more complicated, the less liquid it becomes an object. If there are less than 20 years, to extend the contract is already problematic, more expensive. Contract, which ends in five years, can be considered past due. In this case the object is devalued, it will sell for a penny, which is also difficult. However, "the 115-year-old practice of Knight Frank has not been the case that the lease has expired due to inaction of the landlord" - shows Elena Yurgeneva.
After the expiry of the lease if the owner is willing to sell the land, the lessee or his heirs have the right of redemption on the objective price, denoted by a licensed independent appraiser. In Germany, according to Yu Kaynovoy, there are three options: buy the land owner homes, buy homes owner of the land and lease extension with increasing payments. "If the ground state and the municipality have other plans for the site (eg road construction), the building owner in any case be offered compensation for the residual value of the object", - says the expert. If the owner can not afford housing in the renewal of the lease term, you can take the required amount and re-sell the object, said E. Yurgeneva. Or owner of the land offers a property owner to move it somewhere else, if it is technically possible.
Change the status of the land can and before the expiration of the lease. "In the UK, developers are trying to change the status to freehold. This is a laborious process, but ultimately there is a competitive advantage in attracting foreign buyers, "- said E. Thain. And in England there is such a status as a share of freehold - when the building was owned by several owners, is on someone's land. Often property owners do not mind clubbing together to buy land in and become owners of shares. This is possible if both sides are willing to negotiate. "With a private owner to negotiate more easily than in the lands of the Crown, as he was likely to need the funds for which he is willing to part with a plot", - said E. Yurgeneva.