Leasehold plot: your guide to the heritable building right

How a leasehold plot works

The word "Erbpacht" comes from an earlier legal system; correctly, people have long spoken of the heritable building right (Erbbaurecht). Behind it lies a straightforward principle: instead of buying the plot, you secure the right to use it over a very long period – often 60 to 99 years – and to build a house on it. You own the building, while the land remains the property of the ground lessor. For the use, you pay an annual ground rent. The heritable building right is recorded in a separate heritable building land register; it is inheritable, mortgageable and, like a property, sellable.

The decisive advantage is obvious: the often six-figure purchase price for the land is eliminated. Especially in regions with high land prices, building land only comes within reach as a result, and you can put all of your available equity into building the house. Which plot prices apply in your region is revealed by our overview of plot prices 2026.

Ground rent 2026: concrete calculation examples

Measured as a percentage of the plot value, the ground rent falls due year after year. In 2026 the rates mostly range between 3 and 5 percent; families receive more favourable terms from churches and municipalities, often from around 2 percent. The rent is usually adjusted to price developments every three to five years, mostly linked to the consumer price index.

Church and municipality in the role of ground lessor

The majority of heritable building right plots come from the Catholic and Protestant churches, from foundations, and from cities and municipalities. Behind this are often social and housing-policy intentions, which is why families with children or households with a middle income are given preference. More and more often, municipalities turn to the heritable building right in order to keep building land permanently in public hands and yet create affordable housing. You will discover suitable offers at municipal property offices, at church administrations and occasionally on regional property portals.

Before you sign, you should look closely: check the remaining term, the fixed ground rent along with its adjustment clause, the reversion provision and the amount of the building compensation at the end of the contract. If in doubt, seek legal advice. How you assess a plot in general and judge its location is explained by our guide finding and assessing a plot.

Building a house on leasehold: what matters

For building on a leasehold plot, a prefabricated house is ideally suited, because costs and build time can be reliably calculated – an advantage when no capital is tied up in the plot purchase. When it comes to financing, banks usually expect a sufficiently long remaining term of the heritable building right, frequently 40 to 50 years beyond the loan term, and register their land charge in a senior-ranking position. They take the ground rent into account as a permanent burden.

The legal basis is the Heritable Building Right Act (Erbbaurechtsgesetz, ErbbauRG). Among other things, it sets out reversion and the minimum compensation amounting to two thirds of the building value. An easily understandable overview of the heritable building right is also offered by Wikipedia. Clarify financing and contract terms early on, and then nothing stands in the way of building a house on leasehold.