Demand for land is rising – and so are costs. However, even today the purchase of land is often a good investment. The following is an overview of land prices in Germany. You can also find out how the standard land value is calculated and what the brokerage and notary fees and land transfer tax are.
The demand for land in metropolitan and urban areas
Besides the cost of building a house, the cost of land is the most significant. That’s why a solid financial plan starts with the cost of building land. The price situation for land in the Federal Republic of Germany varies greatly. One thing is clear, however: demand for building land is rising unabated amid attractive interest rates. This is especially true in metropolitan and urban areas. The proximity to the city makes the price. Find out more about a realistic home construction financing plan here.
It is very popular today to find a property outside of a major city where proximity to urban centers is available with good access. In this way, it is possible to benefit from the advantages of country life without the lights of the big city becoming too distant. Increases in the value of properties in popular areas – or those that will increase in popularity in the medium term – are therefore to be expected.
How is the land price calculated?
The pure cost of the land is obtained by multiplying the price of the land per square meter by the total area. Thus, for a plot with a total area of 500 m² and a purchase price of 100 € per m², the pure land costs amount to 50000 €. As a rule, the prices per square meter increase with the size of the total floor area.
How is the standard land value calculated?
The standard land value is an average location value for land in a region, thus it represents an objective benchmark for the price of a plot of land for each region. It is calculated from the recorded sales prices of land, taking into account the level of development in the region. The standard land value goes back to the urban development law (Building Code § 196). As a rule, the standard land values are recalculated and published by the federal states every two years. In some states, there may be a cost for the query.
Price deviations from the standard land value
In most cases, the land on offer is based on the standard land value, but this is not binding in any way. Buyers of a plot of land should nevertheless be aware of the standard land value in order to be able to assess and compare prices correctly.
The standard land value is influenced by a number of factors relating to a particular plot of land. Therefore, deviations can sometimes be strong. Value-reducing factors can be, for example, an excessively large stock of trees, contaminated soil or inadequate development of the property.
Comparison of land prices
This list of some benchmark land prices per square meter in German cities gives you an overview and comparison of how far apart the prices are (as of 2014). Compare these prices once with the offers you have already seen to get realistic ideas.
After the construction costs, the pure land prices are usually the largest item in the overall calculation of your construction project. But to calculate the cost of the land more accurately, there are a lot of other costs. First of all, there are the brokerage and notary fees as well as the land transfer tax.
Apart from land sold by private individuals without the involvement of a broker, there are costs for the broker. In the majority of all land purchases, this is the case. The broker’s commission usually amounts to 5% to 7% of the purchase price (excluding VAT). With our example price of 50000 €, the brokerage costs amount to at least 3000 €.
Without the notary and his necessary notarization of the purchase no land purchase goes over the stage. The notary costs are essentially related to the entries in the land register (land charge, deletion/entry of owner, etc.). Notary fees vary, as they also depend on the purchase price of the land (or property). If we assume a purchase price of 50000 € and a land charge of 40000 €, which must be registered in the land register, the notary costs can be 1000-1300 €. In addition, there are costs for the registration of the new owner and the cancellation of the old owner in the land register with about 1100 €. Here you can find a detailed article about the procedure and costs associated with the registration in the land register.
Real estate transfer tax
It would be very surprising if there were not also a tax on the purchase of land. And, of course, there is such a tax: the land transfer tax. Real estate transfer tax is payable on the purchase of a property. The real estate transfer tax is levied by the federal states and ranges from 3.5% to 5.5%. For our example price of 50000 €, the real estate transfer tax can therefore amount to between 1750 € and 2750 €.