Only developed plots of land can be built on. If you are also looking for undeveloped land when buying land, you need to be aware of the development costs – but in this way you can then also save costs. In this article you will learn everything about the development of a plot of land and associated costs.
the essentials in brief
- The development of a property includes the connection to all major utility networks as well as the sewerage system.
- The person who is the owner of the land plot at the time of issuance of the contribution notice shall pay the development costs. Here, cost traps can arise due to considerable delays between the construction measures and the notice of contribution.
- Undeveloped or partially developed plots of land are generally less expensive – information on the development costs incurred can be obtained from the relevant building authority.
What do development costs include?
The development costs are costs arising from the connection to the gas, water and electricity supply and sewerage systems. But there is also the telecommunications and transport network. In the case of the latter, development costs may be incurred for road construction (including, of course, sidewalk, lighting, and street landscaping) to provide public access to the property. Development costs vary greatly from property to property; it always depends on the degree of development of the property in question and the location of the property.
Who has to pay the development costs?
Development costs are referred to as development contributions, which are generally payable in a uniform amount to the municipality or to the responsible utility offices. The municipality may charge the developer up to 90% of the development costs. The costs shall always be borne by the person who is the owner of the land at the time of issuance of the contribution notice. This can be a tricky business, because there can be a considerable period of time between the construction work to develop the property and the notice of contribution. It must therefore always be clarified whether all costs of development measures from the past have actually already been allocated to the previous owner. You can protect yourself against cost traps by including clauses in the purchase contract stating that all development costs that may still arise are to be borne by the previous owner.
Saving costs through land development?
Incidentally, partially developed or undeveloped properties are generally less expensive than developed properties. This tip should be taken with a grain of salt! With some effort (research, applications, dealing with authorities) and good advice, money can also be saved with the buyer taking over the development. However, such an approach requires an exact cost breakdown as well as a research and thus time expenditure that should not be underestimated.
Development costs overview
Development costs vary widely from property to property. The distance to the nearest connections is decisive here. Therefore, the information provided in the following cost breakdown is only indicative for an undeveloped lot with the construction project of a single-family home.
About other incidental costs for the establishment of the construction site we will inform you in this article.
An overview of building law terms can be found here.
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