Freising Families Turn to Leasehold as Dream of Homeownership Fades
FREISING, GERMANY – October 5, 2025 – The traditional path to homeownership is becoming increasingly out of reach for families in Freising, Germany, as soaring property prices and climbing interest rates create a perfect storm of unaffordability. A growing number are now exploring a different route: leasehold, or *Erbpacht* as it’s known locally. This breaking trend, highlighted by real estate experts, offers a potential solution but comes with its own set of considerations.
What is Leasehold and Why is it Gaining Traction?
Unlike traditional property purchases where you own both the building and the land, leasehold involves acquiring the right to use the property for a fixed period – typically 60 to 99 years – while the land remains the property of the lessor, often a municipality or church. Steffen Conze, Managing Partner at Engel & Völkers in Freising, explains, “Purchase prices are often lower because you’re not buying the land. For young buyers and families, this can be a real opportunity to achieve homeownership that would otherwise be financially impossible.” Scully Dötterl, also of Engel & Völkers, adds that municipalities sometimes actively promote leasehold to support young families or specific professional groups.
The Financial Landscape: Benefits and Burdens
The appeal of leasehold lies in its lower upfront cost. However, it’s not a free pass to homeownership. A key component is the annual leasehold interest rate – essentially a ground rent – which must be factored into long-term financial planning. “It’s similar to an additional loan payment,” Dötterl cautions, “and you need to calculate it for the entire leasehold period, unlike a mortgage which is eventually paid off.” This rate is often tied to land value and can increase over time, potentially offsetting initial savings.
Financing can also be more challenging. Banks tend to be more cautious when lending on leasehold properties, often offering lower loan amounts or higher interest rates. A shorter remaining lease term further complicates financing. Engel & Völkers emphasizes its strong relationships with banks willing to work with leasehold buyers, but prospective homeowners should be prepared for a potentially more rigorous application process.
What Happens When the Lease Expires?
The finite nature of the lease is a critical consideration. At the end of the term, the property reverts to the landowner, though typically with compensation to the leaseholder based on a professional valuation. “An extension isn’t guaranteed,” Conze stresses, “and depends on the lessor’s willingness.” Negotiating an extension should begin 15 to 20 years before the lease expires, but even then, the terms – particularly the leasehold interest rate – can change.
Importantly, the leaseholder *can* sell the property even before the lease term ends. The sale price will be influenced by the remaining lease duration, the current interest rate, and the condition of the building – a longer lease generally equates to a higher value.
Where is Leasehold Most Common in Freising?
Leasehold isn’t a new concept in Freising. Concentrations of leasehold properties can be found in areas like Eichenfeld and the Forest Settlement, where ecclesiastical institutions are prominent landowners. The Lerchenfeld district, particularly south of Isarstrasse, features many city-owned leasehold properties. New developments in Holzgartenstrasse are also exclusively leasehold, with 75-year terms. The practice is also spreading to neighboring communities like Neufahrn, Kranzberg, Moosburg, and Eching.
A Different Path, Not Necessarily a Bargain
The surge in interest in leasehold reflects a desperate need for affordable housing options in Freising. While it’s not a universally superior alternative to traditional homeownership, it offers a viable pathway for those priced out of the market. As Conze aptly puts it, “Leasehold isn’t a bargain per se – it’s a different form of property ownership that requires careful understanding.” For families in Freising grappling with the realities of the current housing market, exploring leasehold may be a crucial step towards realizing their dream of a place to call home. Stay updated on the latest real estate trends and breaking news at archyde.com, your source for informed perspectives on the German property market.
