When buying a house, many people first think about the location, price, and condition of the property. One crucial factor is often overlooked: the land on which the house stands. From a legal standpoint, it is actually the central component of the purchase.
House and Land—Inseparably Linked
In Germany, the principle applies: “The land determines everything.” This means that a building is not legally a separate asset but is firmly attached to the land. When you buy a house, you generally also automatically acquire the land.
This rule is enshrined in the German Civil Code (Section 94 BGB): Buildings are so-called “essential components” of the land. Separate ownership is therefore only possible in special cases.
Who owns the land when buying a house?
1. Standard case: The buyer becomes the owner of both
- Seller owns the land + house
- Buyer takes over both in full
- Ownership is recorded in the land registry
After the notary appointment and the entry in the land registry, you are legally the owner—of both the house and the land.
Special cases you need to know about
2. Hereditary building right: The house belongs to you, but not the land
- You are only buying the house
- The land belongs to a third party (e.g., city, church, foundation)
- You pay a regular ground rent for this
Typical terms: 50–99 years
Risk:
- No full ownership
- Appreciation may be limited
- Financing can sometimes be more difficult
Important: A leasehold interest is then expressly noted in the land registry.
3. Partial ownership and condominium ownership
- You own a share of the property
- This share is tied to your apartment
- Everything is managed through the homeowners’ association
You are therefore a co-owner, not the sole owner, of the property.
4. Leasehold or Usufruct
- Leased properties
- Usufruct rights
- Right of residence
Special caution is advised here, as these rights can significantly impact the value and use of the property.
Land Registry: The Most Important Source of Information
Section I
- Owner of the property
Section II
- Rights and encumbrances (e.g., rights of way, leasehold rights)
Section III
- Land charges and mortgages
Practical tip: Always ask to see a current land registry extract or have it verified by a notary.
Common questions about the property
Does the property belong entirely to the house?
Yes, normally. Exception: Leasehold rights
Can you buy the house and the land separately?
Only under specific legal arrangements
Which is more important—the house or the land?
In the long term, the land is often more decisive for the value
Assessment: Why the land is so important
- Land value (usually increases)
- Building value (decreases over time)
Therefore:
Good location = land that retains its value
Checklist before buying
- Land registry checked
- Ownership structure clear
- No leasehold (or chosen intentionally)
- Third-party rights understood
- Property size and use verified
- Zoning plan reviewed
When buying a house, in most cases you’re not just buying four walls, but a piece of land—and that’s exactly what determines the actual value. The property belongs entirely to you, provided there is no leasehold or special circumstances. If you look closely here, you’ll avoid future problems and make a significantly better investment decision.
Leasehold rights in Munich: How common are they, and what should you watch out for?
In cities with very high land prices—especially in Munich—hereditary building rights play a significantly greater role than in rural areas. It is not the norm, but it is noticeably more common than the national average.
Why leasehold rights are more common in Munich
- Extremely high land prices
- Limited building land
- City policy: Land is not sold
Large property owners are often involved:
- City of Munich
- Churches
- Foundations
- Public institutions
How common is leasehold in Munich?
- Not a mass market, but a significant share
- Common in apartment buildings and townhouses
- Increasingly also in new construction
Real estate listings often include the note:
“House on leasehold land”
Typical terms in Munich
- Term: 60–99 years
- Ground rent: approx. 2–5% of the property value annually
- Adjustment: often linked to inflation
Example:
Property value: €800,000
Ground rent: 3% €24,000 annually
Advantages and disadvantages
Advantages
- Lower purchase price
- Access to expensive locations
- Less equity required
Disadvantages
- Ongoing additional costs
- Uncertainty at the end of the term
- More difficult to finance
- Lower appreciation
Important factor: remaining term
- > 70 years: usually unproblematic
- 40–70 years: examine closely
- < 30 years: critical
At the end of the term:
- Property reverts to the owner
- Compensation is paid (not always in line with market value)
Market trend
- Leasehold rights are on the rise again
- Particularly common in new construction
- Used to make purchase prices appear lower
Leasehold is a relevant model in Munich’s real estate market. It can make sense if location is more important than ownership of the land and the terms are carefully reviewed. However, without analysis, it can lead to long-term disadvantages.