Crisis in the real estate market: ground rent causes housing dreams to collapse

Crisis in the real estate market: ground rent causes housing dreams to collapse


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In the Heddernheim district northwest of Frankfurt, there are almost only rental houses on an entire street. These are properties where the houses belong to individuals who also live there. The associated land is owned by the city of Frankfurt and is normally leased to the owners for 99 years.

Pensioner Anette Fuchs is one of the many people who bought a rental house here decades ago: “Before, the idea was that middle-income families could create a property and afford something. But that is no longer possible.”

When you sell, the interest rate trap closes

When Anette Fuchs bought it, the rent for the land was still 80 euros per month. She continues to pay this interest to this day. The relatively small sum allowed him to finance the loan for the house and the rental of the property, that is, the rent of the land. Maintenance and modernizations were also included.

Now she is retired, the house is too big and requires too much work. Now he wants to sell. But the rent of the land in the city of Frankfurt, which has now increased by 900 percent, in its case up to 800 euros a month for the new owners, frustrates her plans. And also interested families: “There are many young families who are interested in my house, but then they realize that they cannot pay the high rent for the land and that is why they reject it,” says Anette Fuchs.

Lucrative business for the city

The ground rent for the new owners in Frankfurt am Main is currently 2.5 percent. This results in a lucrative business for the city, as the municipality owns around 5,000 inheritance rights in the city area. Total income is calculated by multiplying the standard land value by 2.5 percent of the land rent.

Bernd Oettinghaus is also interested in Anette Fuchs’ property. The master gardener’s financial situation is good, but not suitable for unlimited adventures. Oettinghaus is bothered by the high price of renting the land. “I do not think it’s fair”. For Oettinghaus, the potential of Frankfurt’s already competitive real estate market is not being fully exploited.

In reality, Oettinghaus wanted to buy a rental house. Because he and his family are in danger of being fired for personal reasons: this is also the day-to-day life in the real estate market. But given the high rental price of the land, he is now thinking about buying a house on the free market: “If I bought a house with land now, in the end I would buy it cheaper than if I had one in the city.” enter into a lease contract.”

If Oettinghaus paid the 99-year lease for the land, he would pay the equivalent of three times the property and it would still not be his. “The state should not be the beneficiary,” says Oettinghaus.

“A failed agricultural policy”

Is the city of Frankfurt really more expensive than the free market? Birgit Kasper from Frankfurt Network for Community Living eV sees previous failures as the reason for the rise in interest rates and she sees the city’s resulting appearance as a greedy broker chasing the biggest profit. “The issue is that in recent years we have simply had a failed agricultural policy that was based on the free play of forces to regulate the market.” Her general rule: if the city sets low prices, low prices will occur in the market.

The association has at least now assured that the objective of the coalition agreement of the city’s parties is to lower the ground rent again. According to information from burlap radio There is even an agreement to reduce the ground rent from 2.5 to 1.5 percent. Therefore, the office responsible for construction and real estate has made suggestions to politicians for its implementation. Now the ball returns to the court of the city’s politicians. However, the interest rate remains as high as ever.

Is it no longer affordable for families?

If ground rent were reduced by one percentage point to 1.5 per cent as proposed, it would make a huge difference in practice. If the 800 euros per month in Mrs. Fuchs’ example and a classic loan term of 32 years are used, then a potential buyer will have to pay a total of 307,200 euros.

With a ground rent of only 1.5 percent, this sum is reduced by more than 100,000 euros. The city of Frankfurt currently offers a discount for families with children. There is a 20 percent interest reduction per child, taking into account a maximum of four children.

However, this does not seem to help, according to Anette Fuchs’ observation: “The city makes money at my expense. I have to reduce the sale price so that, together with the high rent of the land, it does not become a utopian sum. ” That is why he is no longer looking for a family with children, but rather people with higher salaries. It seems that the city is not as social and family-oriented as it could be.

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