Partial sale of land 2023 – Can I sell part of my land? Yes! Many people think that it is possible to sell only a part of a house or a condominium. The technical term for this is: partial sale, or partial purchase. But in fact it is also possible to offer land for partial purchase. If you are in possession of a piece of land, e.g. an agricultural area or a forest area, and you want to sell it, you can either sell it completely or you can only sell part of your land. Here you can learn everything about the partial sale of land.
Partial sale land
First of all, let’s start with the basics, for those who have only heard of the “partial sale of a property”.
What does partial sale mean? How does a partial sale work?
A small definition – The principle behind the partial sale, is based on the sale and a subsequent royalty that you pay to your new part owner. So from the understanding the “user fee” is simply explained, with the comparison to rent or lease.
Partial sale at a glance:
- You sell a share (usually 10% – 50%)
- Financial company becomes part owner
- You retain the full right of use
- For this you pay a usage fee
Still in operation, whether in NRW or elsewhere:
Differences in the user fee
When buying a plot of land, it basically comes down to one factor, how big is the usage fee? Should you not have to sell very quickly, due to liquidity, you should think about the alternative mortgage loan anyway. Because, the user fee (disadvantage) is usually between 3 and 5% in the partial sale of land.
- Usage fee depending on provider: 3-5% p.a.
- Sold share: 100,000 euros
- User fee: 3-5% p.a.
- Cost: 3.000 – 5.000 Euro / year
So you pay an annual fee of 3,000 to 5,000 euros for the share sold worth 100,000 euros.
How is the value of your property determined?
If you do not know the current value of your land, it still needs to be determined. Central to this are, among others, key figures (such as the land area), its use (undeveloped land or used agricultural land, forest, springs, etc.). Important is the standard land value, which you can find in the standard land value map, but also an expert opinion. This is ultimately the basis for the concrete valuation.
Read more about the topic here:
Of course, the most sought-after are plots of land in the urban area, but many also sell agricultural land.
Comparison: mortgage loan on land
Compared to the mortgage loan, where you pay only 1%, already a significant disadvantage of the partial sale. In return, you do not have to go through the credit check of the banks. Another advantage, they get the purchase price almost immediately transferred.
At 1%, the annual savings are already 2,000 – 4,000 euros. In 10 years, a considerable difference.
- Advantage: More favorable conditions
- Disadvantage: Credit checks
So, if you have a lack of liquidity, so that you are forced to sell a plot of land immediately, then a partial purchase is a possible option. Because you save many steps in the sale of land.
On the other hand, you have high follow-up costs. Therefore, a comparison is worthwhile! Sale? Partial sale? Mortgage loan on the property? My recommendation is clearly the mortgage loan, because with it you save 2/3 of the costs (comparison partial sale). If you need money fast, really fast, the partial sale is definitely an option.
So always consider both options, partial sale and real estate loan.
Step 2: Total sale from the plot
All partial sale providers also give you the direct option of selling your property in full in the foreseeable future. The buyer is then the previous part owner, who thus becomes the sole owner of the property.
Here I give in the guide partial sale property still 2 valuable tips:
- Total sales and inflation
- Agree usufruct
Total sales and inflation
Assuming you sell in 15 years, inflation (demonetization) has increased ~ 32%, at 2% / year. So if you are made offer below 32% appreciation, not even inflation is compensated. That’s why it’s worth taking a look at the provider comparison.
If you want to sell your property outright but continue to use it “until the end of your life”, agree on usufruct. The usufruct guarantees you a right of use until the end of your life (non-transferable).
How does the part sale of a plot of land?
Let’s briefly summarize the findings again:
Difference sale and partial sale
In the regular sale of land, you sell your entire property, which means 100% of the shares of land. In case of partial sale of a land plot, you sell only a part of the property (land plot).
Most partial sale providers buy between 10%, 20%, 25% or even 50%, that is half of your property. For this you usually get, quickly and easily transferred the purchase price. This is the great advantage of partial sale!
Usage fee after the partial sale
For the further, sole use, you have to pay a monthly usage fee, the so-called usage fee. Depending on which provider you choose for the partial sale of your land, the amount varies from 3% to 5% (of the purchase price per year). Compared to the mortgage loan on your land (only 1%), already a significant difference for land sales.
Conclusion: partial sale of land makes sense? 3 options
Partial sale – If you need money fast, really fast (within a few weeks), due to cash shortages, then partial sale of your property is an option.
Sell and lease – Should you have a little time (more than a few weeks) you should rather think about selling your property and then lease it. Because especially in terms of inflation (total sale in the second step), you have some disadvantages in the partial sale.
Mortgage loan on your property – Important, talk to your bank. Even at an older age you can get loans. Many people are afraid of this and say “I won’t get a loan from the bank anyway”. Wrong! Therefore, talk with your bank and with 2, 3 alternatives. This way you pay only 1% instead of 3-5% (at the current interest level).
Tip. Also an option for forest areas with further management: