Planning costs

Planning costs include all expenses incurred during the preparation and planning of a construction project-in particular, architects’ and engineers’ fees, surveying costs, expert fees, and official permit fees. In DIN 276 (Costs in the Construction Industry), they are grouped under cost category 700 (incidental construction costs). Planning costs are part of the total investment costs of a construction project and should be realistically calculated by building owners from the outset.

Components of Planning Costs

Planning costs typically include the following items:

• Architect’s fee according to HOAI (service phases 1-9): 8-18% of net construction costs, depending on the scope of the commission
• Specialist planning services: structural engineer, building services engineer (TGA - technical building equipment), energy consultant (for KfW grant applications), structural engineer for structural analysis
• Expert reports: Soil reports/site investigation, sound insulation reports, fire protection concept, hazardous substance reports for existing buildings
• Surveying and cadastral work: Survey fees, elevation stakeout, site plan
• Government fees: Building permit, certificate of separation, development contributions
• Project management: Often commissioned separately for larger projects

For a medium-sized residential construction project, planning costs typically amount to 12-18% of the net construction costs. Anyone who underestimates this item in their financial planning will quickly run into bottlenecks-even if construction costs and land prices were calculated accurately.

Tax Treatment of Planning Costs

For rental properties or commercial properties, planning costs are generally considered construction costs that must be depreciated over the building’s useful life (AfA). They therefore increase the tax base for annual depreciation and only result in long-term tax savings.

For owner-occupied residential property, planning costs are not tax-deductible. An exception is made for tradespeople’s services under Section 35a of the German Income Tax Act (EStG)-however, architects’ fees for planning services do not fall under this category.

If planning costs are incurred for a project that is ultimately not realized (e.g., failed building permit application, lack of financing), these can be claimed as immediately deductible business expenses or-for private investors-as income-related expenses, provided there is a connection to taxable income and it is proven that there was an intention to rent out the property. Tax recognition depends on a case-by-case assessment; a tax advisor should be consulted early on.

Planning Costs for Failed Projects

A frequently underestimated risk: If a construction project fails after the planning phase has begun (e.g., rejected building permit application, failure to secure financing, withdrawal from the land purchase), planning costs already incurred must still be reimbursed. According to the HOAI, the architect has a claim for remuneration for services rendered. In the event of termination without good cause, the client owes the full fee minus any expenses saved-in practice, often 80-90% of the full fee.

Planning costs can thus quickly reach a five-figure sum even before a single brick has been laid. Anyone who purchases a plot of land and begins planning immediately afterward without having secured binding financing bears this risk alone. We recommend obtaining the bank’s financing commitment before beginning planning and agreeing to a withdrawal clause in the architect’s contract in case the building permit is not granted.

Practical Tip for Property Owners in Nuremberg and Franconia

Anyone purchasing a plot of land in the Nuremberg metropolitan region and planning to build or renovate should include planning costs early and in full in their financial planning. Banks accept planning costs as part of the total investment costs and take them into account when granting loans-but only if they are explicitly listed in the financing application.

An early cost estimate by the architect (according to LP 2) provides guidance. The margin of error for this early estimate is 20-30%, depending on the project’s complexity; only the cost calculation according to LP 3 offers a more reliable basis. Anyone planning a project with limited equity should, to be on the safe side, budget for the upper end of the planning cost range.

Upon request, we can connect you with experienced planning firms in the region and assist buyers in compiling a comprehensive project cost overview-including land, ancillary costs, planning costs, and construction costs.

Frequently Asked Questions

Are planning costs eligible for construction financing?

KfW loans generally finance the total project costs, including planning costs, provided they are part of the reasonable total investment. Special programs for energy-efficient renovations (BEG - Federal Funding for Efficient Buildings) explicitly include energy consultant costs as eligible and even provide investment grants for consulting services (up to 50% of the energy consultant costs). Those who undertake energy-efficient renovations and involve a certified energy efficiency expert thus not only save on heating costs but also reduce planning costs through subsidies.

As a buyer of a new-construction property, can I verify the planning costs?

In developer projects, planning costs are included in the total price and are not listed separately. For custom projects (independent architect), clients receive detailed HOAI fee quotes. As a buyer of a new-construction property that is not yet completed, you should carefully review the building specifications and the planning services included-particularly which planning phase the developer’s architect covers and how deviations from the plan are handled.

What percentage of the total construction costs do planning costs account for?

For medium-sized residential construction projects, planning costs typically account for 12-18% of the net construction costs. For complex projects (special-purpose buildings, historic structures, technically challenging buildings), this can rise to 20-25%. For standard projects with a simple scope of work, it can be reduced to 8-12%. For a single-family home with construction costs of 400,000 euros, this means planning costs between 32,000 and 72,000 euros-depending on complexity and the scope of the commission.

When do I have to pay planning costs?

Architects invoice their fees upon completion of individual project phases. Progress payments are common and must be specified in the contract. Government fees (building permit) are due upon application or upon issuance. Expert fees are often billed in advance after the contract is awarded or upon delivery of the report. A complete payment schedule for all planning costs should be part of the financing plan.

What are the typical planning costs for the energy-efficient renovation of an older building in Nuremberg?

The energy-efficient renovation of an existing building generally requires more planning services than a new construction, as the existing structure must first be surveyed and analyzed. Typical items for a comprehensive renovation in the Nuremberg metropolitan region include: an energy consultant’s report (eligible for BEG funding, costs approx. 1,500 to 3,000 euros), a building condition survey by an architect or expert (approx. 1,500 to 4,000 euros depending on building size), and, if necessary, a hazardous materials assessment for buildings constructed between 1950 and 1980 (asbestos, PCB, KMF - costs 800 to 2,000 euros), a fire safety plan in the event of a change of use or roof conversion, as well as the actual architectural and specialist planning services for the renovation measures. Anyone applying for subsidies from KfW or BAFA also needs a certified energy efficiency expert (EEE), whose costs are subsidized at 50 percent by the BEG program. In total, planning costs for a comprehensive renovation in Nuremberg can range from 15,000 to 60,000 euros, depending on the size of the building-amounts that must be factored into the financing plan early on.

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