Leasehold Rights in Fürth: Opportunities and Risks Associated with Extending the Term

Leasehold properties in Fürth are a real option for many prospective buyers looking to purchase a home below market price. But as the lease term nears its end, questions arise that go beyond everyday concerns: How do I negotiate with the church or the city of Fürth? What are the tax implications? And how does the remaining lease term affect resale value? This article provides an objective overview-without glossing over the risks.

What Leasehold Means-and Why Fürth Is Unique

Under leasehold (regulated by the Leasehold Act, ErbbauRG), the user does not acquire the land itself, but rather the right to build on that land and use the building. In return, they pay the landowner an annual ground rent, which typically ranges between 2 and 5% of the standard land value. The terms generally range from 75 to 99 years-in Fürth, often 75 years for older contracts dating from the post-war period.

Fürth has an unusually high concentration of leasehold properties. The reasons for this are historical: church-affiliated organizations (Evangelical Lutheran parishes, the Diakonie) as well as the City of Fürth itself granted building land as leaseholds in the 1950s and 1960s in neighborhoods such as Hardhöhe, Eigenes Heim, and Ronhof to grant building land as leasehold rights in a planned manner, in order to enable broad segments of the population to own homes without permanently removing the land from public or church ownership.

The result: In these neighborhoods, numerous contracts dating from the 1960s and 1970s are now expiring, some within the next 10 to 20 years. Owners who do not act now risk seeing the resale value of their property drop dramatically.

Term Extension: When and How to Negotiate?

The golden rule is: enter into negotiations no later than 10 years before expiration. Those who wait too long lose bargaining power-and prospective buyers will hardly be able to secure financing if the remaining term is less than 15 years.

With church property owners (parishes, social welfare organizations), negotiations often proceed more smoothly than feared. Church-affiliated entities have an economic interest in reliable ground rent income and generally no strategic interest in reclaiming the property for their own use. Nevertheless, they base their calculations on the current standard land value when the ground rent is reset upon renewal-which can mean a significant increase for leaseholders.

With the City of Fürth as the property owner, the procedures are more formalized. Applications for renewal are discussed in the city council; the resolution is publicly available. The City of Fürth bases its leasehold rent on approximately 4% of the current standard land value. With a standard land value of, for example, €400/m² and a plot area of 500 m², this results in a ground rent of €8,000 per year-significantly more than a contract from 1968, which may still have been based on DM 0.50/m².

Section 27 of the Leasehold Act (ErbbauRG) governs compensation upon expiration: The landowner must generally compensate at least two-thirds of the market value of the building. This sounds like a safeguard-but it is no substitute for timely renewal negotiations, as the market value drops significantly as the remaining term decreases.

Market Data 2026: Value Discounts by Remaining Term in Fürth

The value discount relative to comparable freehold property increases significantly as the remaining term decreases. Banks often apply loan-to-value discounts or refuse financing entirely for remaining terms under 30 years.

Remaining Term	Value Discount vs. Freehold	Typical Ground Rent (% of Standard Land Value/Year)	Financeability
75 years	5 - 10%	2 - 3%	Fully financeable (like freehold)
50 years	10-18%	3-4%	Easily financeable
30 years	22-30%	4-5%	Limited (discounts on loans)
15 years	35-50%	Renegotiation overdue	Barely financeable

Source: Fürth Appraisal Committee, Purchase Price Compilations 2023-2025; Association of Private Builders (VPB), Leaflet on Leasehold Rights 2025; my-home.de editorial team’s own research. As of Q1 2026. Discounts are indicative values based on local transactions, not legally binding figures.

Risk of Reversion: What Section 32 of the Leasehold Act Means

Reversion is less common in everyday life than its reputation suggests-but it is a real possibility. Section 32 of the Leasehold Act allows the landowner to take over the leasehold right in exchange for compensation if contractually agreed grounds for reversion exist. Common clauses include: prolonged default on leasehold rent payments, unauthorized structural alterations, or breach of the obligation to use the property.

The amount of compensation must be stipulated in the contract. Older contracts (prior to 1990) often contain unfavorable provisions that set the building’s value significantly below market levels. Anyone purchasing a leasehold property should have the contract reviewed for these clauses-ideally by a lawyer specializing in real estate law.

> The valuation tool from leadmarkt.ch provides an initial estimate of the market value of a leasehold property in Fürth-data-driven, in just a few minutes.

Local Nuance: Hardhöhe and Eigenes Heim - Two Very Different Markets

Anyone looking for or owning leasehold properties in Fürth should be aware of the differences specific to each neighborhood. Hardhöhe is a post-war large-scale housing development with a high proportion of leasehold properties; the land is often owned by church-affiliated entities. The location is solid but not premium. Accordingly, the standard land value is lower than in the Old Town or in Burgfarrnbach.

In Eigenes Heim, on the other hand-a historic single-family home neighborhood dating from the 1920s-hereditary building rights have a different character. The lots are smaller, the houses have character, and the location near Stadtfeld makes them highly sought-after. Here, leasehold renewals are actively pursued, as buyers appreciate the ambiance and are willing to accept a higher ground rent.

Ronhof-known as the home of Sportclub Fürth-features rather simple post-war development with a mix of leasehold properties. Here, it is essential to carefully verify who the landowner is and what renewal policy they follow.

Leasehold Rights When Buying: What Prospective Buyers Need to Know

Anyone looking to buy a property with leasehold rights-whether in Hardhöhe, Eigenes Heim, or elsewhere in Fürth-should carefully review the following points before the notary appointment:

Remaining Term and Renewal Option: The most important factor is the remaining contract term. Anything under 30 years significantly limits financing options. Many banks require that the leasehold term exceed the loan term by at least 10-15 years. A commitment from the landowner to extend the lease, preferably in writing as an option agreement, is worth its weight in gold.

Ground rent adjustment clause: The leasehold agreement specifies the index according to which the ground rent may be adjusted. Older contracts often refer to the Consumer Price Index (CPI); newer ones to the price index for residential buildings. In the event of sharply rising construction costs, a price index clause can lead to significantly higher ground rent demands than expected. This clause should be reviewed by a legal expert before the purchase.

Land Registry Entry and Priority: The leasehold right is registered as an independent right in the land registry (leasehold register). The seller’s mortgages and land charges may encumber the leasehold right. A review of the land registry is an essential part of due diligence prior to purchase.

Reversion clause in the contract: The specific wording of the reversion clause determines under what conditions the landowner can reclaim the right and at what price. Clauses that limit the reversion price to a fraction of the market value are disadvantageous to owners and should be renegotiated during renewal negotiations.

Tax Treatment of Ground Rent

In the case of rental, the ground rent is fully deductible as income-related expenses under Section 9(1)(7) of the German Income Tax Act (EStG). This makes leasehold investment properties financially attractive, as the purchase price is lower and the ongoing ground rent costs reduce the tax base.

In the case of owner-occupancy, the ground rent is not deductible-it is a current expense with no tax effect, similar to rent.

In the case of a gift or inheritance of the leasehold right, the value for inheritance or gift tax must be capitalized based on the annual value of the ground rent (Section 193 of the German Valuation Act (BewG))-this usually results in a significantly lower tax value than with full ownership.

Leasehold Rights and Financing: What Banks Require

For buyers who wish to purchase a leasehold property in Fürth using borrowed capital, the bank’s perspective is crucial. Most German banks finance leasehold properties but set clear minimum requirements:

The remaining term must generally exceed the loan term by at least 10-15 years. For a 25-year loan, this means a minimum remaining term of 35-40 years. If this condition is not met, the bank will reject the application or demand significantly higher interest rates and lower loan-to-value ratios (typically 60-70% instead of 80-90% of the purchase price).

The loan-to-value limit is not based on the purchase price, but on the bank’s internal market value of the leasehold. With a remaining term of 50 years, this is approximately 10-15% below the full ownership equivalent. Buyers must therefore contribute more equity.

A helpful step in preparation: submit the current leasehold agreement in its entirety to the bank, including all amendments. Banks evaluate the reversion compensation clause separately-the more favorable the terms for the leaseholder, the higher the loan-to-value ratio.

Leasehold Rent Increase Upon Renewal: Hardhöhe Calculation Example

The financial implications of renewal negotiations are often underestimated by owners. Anyone who currently holds a leasehold in Hardhöhe dating from 1968 may be paying ground rent based on an assessment rate of 0.80 DM/m²-converted to euros and indexed, this might amount to 1.20 €/m² per year. On a 500-m² plot, this amounts to 600 €/year.

Following a renewal based on the current standard land value (assumed to be €320/m² for Hardhöhe) and a ground rent rate of 4%, the result is: €320 × 0.04 × 500 m² = €6,400/year. The increase amounts to more than ten times the previous value.

For owner-occupiers, this is a significant ongoing expense with no tax relief. For landlords, however, the increase is deductible as business expenses; the net additional cost after taxes amounts to approximately €3,700 per year at a marginal tax rate of 42%-a burden, but manageable if the rental income is sufficient. An early calculation of which option is more cost-effective after taxes is essential for every owner in Fürth with an expiring heritable building right.

Conclusion for Heritable Building Right Owners in Fürth

Leasehold is not a problem-it is a legal construct with clear rules and clear risks. The key tool is timely renewal negotiations. Anyone who currently owns a leasehold property in Hardhöhe, Eigenes Heim, or Ronhof and plans to sell within the next 20 years should check now how many years remain on the lease and whether a renewal can be negotiated.

The same applies to potential buyers: A leasehold property with a long remaining term, clear contractual documentation, and a cooperative landowner (the church or the City of Fürth) can be an excellent opportunity to acquire home ownership below market price. The risks are real but manageable-if you are aware of them and actively manage them.

Before entering into negotiations, it’s worth taking a look at the valuation tool from leadmarkt.ch-it provides a market assessment for Fürth and helps you better gauge the starting point for discussions with the landowner.

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Created by the my-home.de editorial team in collaboration with regional real estate analysts. Data as of May 2026.