Social and post-bonding: Definition & Explanation

What does social binding mean? A social commitment is a price commitment of the property. In order to support low-income citizens, the state thus offers social housing.

Important: If you want to rent here, you need a certificate of eligibility for housing.

This is favored by the promotion of public funds, such as low-interest loans and grants from public authorities. If you want to buy a property with a social commitment, you are bound to it until the public loans and grants have been repaid. If everything has then been paid off, it takes another 10 years until the social binding officially ends – also called: Nachbindung.

Maximum rent: cost rent & rent increase

How much rent can you expect as a landlord of a property with social commitment? In order to ensure affordable housing, only a “cost rent” is charged here. For this, only the running costs of the property are taken into account, such as the financing costs and the public building loan. A rent increase may then only take place every 3 years. After the end of the additional commitment period, you can then adjust the rent to the current rental prices.

These factors are taken into account in the cost rent:

• Current costs
• Financing costs
• Public building loans

Summary: What is a social bond?

So here are the most important points summarized at a glance:

• Financing through public funds
• Renting to low-income persons through housing entitlement certificate
• Post-commitment period ends 10 years after full repayment of public loans
• Maximum rent is limited by cost rent

Invest in a property with a social commitment

Now that we have clarified what a property with a social commitment is, the question naturally arises: Is it worthwhile at all to invest in such a property as an owner-occupier and capital investor? Let’s take a closer look at the two cases:

Buy property with social commitment for personal use

As already mentioned, only people who have a housing entitlement certificate due to their low income can move into a property with a social commitment. This also applies to owner-occupancy. So if you as a buyer earn only a low salary, the purchase of a property with social binding for owner-occupancy is quite possible. However, if you earn too much, you will need to apply for an extra exemption. This can also lead to increased incidental purchase costs, as you will have to pay a shortfall occupancy tax.

The most important summarized:

• Only for low-income buyers
• If salary is too high: apply for an exemption and pay a shortfall levy.

Real estate with social commitment as capital investment

If you invest in a property with a social obligation as a capital investment, you must always expect a shortfall. Real estate with a social commitment is therefore only really interesting as an investment for capital investors if the low return is reflected in a favorable purchase price and your goal is tax-free capital appreciation.

Conclusion: Should you buy a property with social binding?

As an investor, an investment in a property as a social commitment is therefore only worthwhile if the focus is on tax-free appreciation without time pressure. Whereas owner-occupiers benefit above all if they themselves have a residential entitlement certificate.

You can find even more tips about real estate with social binding here:

• Social obligation: Real estate, social housing, obligation, rent control and deadlines (external).

First apartment / first house: Learn for free

My thought behind the website? The entire buying process, on one page, in detail, with tips and insider tips. Not just one page with the typical 1, 2, 3 processes.

Learn completely free, 24 hours, 7 days a week online. With important calculations, of course, calculations and formulas, as well as their calculation paths, checklists but also valuable experience and mistakes.

If you have any additional questions, you can always write to me and my team on the website. We will then include these additional questions in our Q&A and.

This means that with every question you ask, our platform gets better! From the preparation on the real estate purchase, to the purchase price negotiation, to subsequent rental, if you buy your property as an investment.

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Old real estate: apartment & house from older decades

Over 2,650,000 properties in Germany were built before the year 1919. And some time later in the middle of the century, there were even almost 7,500,000 houses! Of course, construction technology was different back then. But as the decades passed, the building industry rapidly learned and not only resorted to more efficient building materials, but also focused on the topics of sound and heat insulation, as well as fire protection.

Here is a brief overview:

• Built before 1919: 2,655,042
• 1919 – 1949 Built: 2,374,762
• 1950 – 1979 Built: 7,357,255
• 1980 – 1989 Built: 2,090,142
• 1990 – 1999 built: 2.490.829
• 2000 – 2011 built: 1.954.588

Each decade brought different advantages and disadvantages. Do you want to invest in a condominium built in 1940? Or buy an apartment building built in 1967 as an investment? Before we go into the different defects, here in advance the advantages and disadvantages of such an older existing property:

Existing property: advantages and disadvantages summarized

If you want to invest in an income property, then an existing property from older decades has very clear advantages: The purchase price is low and the rental yield is high. The ancillary purchase costs and the equity capital to be invested are also kept within reasonable limits. At the same time, maintenance costs are comparatively high.

Older existing properties in B and C locations make excellent yield properties!

Here again summarized, the advantages and disadvantages.

Advantage of buying an old property:

• Mostly more favorable purchase price
• Costs are calculable if you are aware of the defects
• Lower purchase price often ensures better return on investment
• Location in grown infrastructure

Disadvantage of buying an old property:

• High costs for maintenance and repairs
• Possible hidden defects

So what distinguishes the properties of different construction years from each other? And what are the respective defects you should expect? So let’s start chronologically – with properties older than 120 years.

Real estate with year of construction 1900

Cracks in the masonry are typical for older properties built before 1900. Due to the outdated construction technology of that time, thermal insulation is either non-existent or inadequate. The windows are usually single-glazed, letting the cold into the house in winter, while moisture accumulates in the attic and basement rooms. And some deficiencies can be found in the bathrooms as well: Lead pipes, which have not been permitted since 1971, can often be found here and usually need to be urgently replaced after purchase.

Typical for 120+ year old properties: energy sufficiency was not an issue back then!

Defects of real estate before 1900

Here is a brief overview:

• Cracks in plaster and masonry
• Lack of thermal insulation on the facade, roof and windows
• Damp basement
• Outdated technology and electronics
• Outdated clay and lead pipes in the bathroom

Real estate with year of construction 1900 – 1939

Similar defects can also be found in properties built between 1900 and 1939. A lack of underlayment lets cold and damp into the house, wooden beam ceilings are plagued by sponge infestation and the walls, which are often constructed far too thinly, are prone to mold. Not only the ceiling is made of wood, but also the stairs – an enormous fire risk!

Characteristic: In the past, no attention was paid to fire protection during construction!

Checklist: Defects of real estate around 1900 – 1939

All shortcomings briefly summarized at a glance:

• Missing underlays
• Condensation problems
• Sponge and mold infestation
• Hardly any fire protection available
• Obsolete clay and lead pipes
• Cracks in the masonry

Real estate with year of construction 1939 – 1945

Typical for real estate built between the years 1939 and 1945 is the poor building fabric. During the war, raw materials, time and energy were put into the war. Building was therefore fast and cost-saving, which is why both building fabric and the statics of some properties suffered. Unsuitable building materials were also used, such as building rubble and summer wood.

Checklist: Defects of real estate around 1939 – 1945

Typical deficiencies include:

• Poor building fabric
• Pest infestation due to wrong building material
• Static problems
• Cracks in the masonry
• Obsolete gas pipes
• Hardly any fire protection

Real estate with year of construction 1945 – 1959

Above all, poor or missing thermal insulation is often found in properties built between 1945 and 1959. Building materials that are now considered questionable were also often used. These include asbestos, tar, formaldehyde paint and lead paint. Still an issue: the lack of fire protection. After the war, houses had to be built quickly and efficiently. As a result, there is usually a lack of access for the fire department, and fire doors are also almost non-existent. Soundproofing was also not considered at the time, which is why old apartments from this period are often very bright.

Checklist: Defects of real estate around 1945 – 1959

Characteristic of real estate from the period are:

• Use of questionable building materials
• Lack of fire protection
• Lack of soundproofing
• Lack of thermal insulation
• Leaking gas pipes
• Cracks in the masonry

Real estate with year of construction 1960 – 1969

In the second half of the 20th century, the construction method improved. Wood was no longer used for stairs and ceiling. Instead, stone and concrete were now used and the windows were insulated with aluminum. Drains prevented moisture from causing mold in the basement and attic, and underlayment was installed. From now on, emphasis was placed on thermal insulation, but harmful substances continued to be used for this purpose.

Checklist: Defects of real estate around 1960 – 1969

Here is a brief overview:

• Building materials of concern
• Insulation harmful to health
• Concrete damage
• Uninsulated roof trusses

Real estate with year of construction 1970 – 1979

In the 1970s, building technology once again improves immensely. The newly adopted requirements for sound insulation lead to more efficient construction. Lead pipes are no longer laid, but copper water pipes, and construction is mainly done with concrete. Despite improved building materials, cold penetrates the living spaces in winter and leads to mold.

Checklist: Defects of real estate around 1970 – 1979

Typical deficiencies include:

• Parquet adhesive containing tar
• In need of renovation
• Concrete as a building material

Real estate with year of construction 1980 – 1999

Properties built in the last 30 to 40 years are usually characterized by their modern construction technology. Nevertheless, some deficiencies can be found here as well. The costs for maintenance are high, the roof connections are broken and the central heating before 1985 often leads to problems.

Checklist: Defects of real estate around 1980 – 1999

Here again the typical defects from 1980 – 1999:

• Connections and terminations for flat roof
• Central heating
• Expensive maintenance

Conclusion: Should you invest in old real estate?

Admittedly: Compared to new buildings of the modern age, properties from older construction years have their very own charm. And depending on the year of construction, they bring their own advantages and disadvantages, and with a little capital, even building services, roof and masonry can be renewed.

You can now find even more about the respective defects by year of construction on my new project for real estate buyers (Immobilien-Erfahrung.de):

• Year of construction property: defects and condition (external)

Der Beitrag Real estate defects by year of construction: building fabric, masonry, insulation & Co. – Valuation erschien zuerst auf ℄ Real Estates.

New! Especially for real estate buyers

Buying real estate from A-Z: preparation, search criteria, buying process and all that, free of charge and online, from experts.

Now on real estate-experience.com

Buying an apartment, buying a house, owner-occupation or capital investment, yield or investment property? On my new project Immobilien-Erfahrung.de you will now find everything you need to know for your successful real estate purchase! Learn everything you need to know about setting goals when buying real estate, types of locations(A-, B- and C-locations), types of real estate, their yields and more! All online and free of charge! What you absolutely have to pay attention to before you start looking for an apartment. Now on Immobilien-Erfahrung.de:

• Buy criteria apartment

Checklist: Criteria for your real estate investment

With our 11-point checklist you are well prepared for your real estate purchase:

Real estate as an investment vs. personal use

At the beginning, the question clearly arises: Do you want to live in your property yourself? Or do you want to rent out your apartment as an investment property after the purchase? This is something to think about at the beginning. After all, this not only affects the financing. As an owner-occupier, you will continue to be responsible for the operating costs yourself after purchasing the property. However, if it is a property as an investment, these costs are mainly covered by the tenant and the tax office.

• Self-interest or capital investment? Comparison

Amount of the purchase price: factors

It is equally important that you set a maximum purchase price for yourself. You should take several factors into account here. These include your creditworthiness, the available equity capital and your mortgage lending value.

Learn more about the important factors including tips and tricks here:

• Maximum purchase price

Maximum gross rental return: Formula

What is the minimum rental yield required for the investment to be both profitable and paid off by the tenant? We recommend the following formula for this:

Formula: Annual rent / purchase price * 100

Investors pursue one primary goal, efficient wealth accumulation. Accordingly, the gross rental yield of a yielding property must be high. Learn more here:

• Minimum gross rental return

Buy rented or unrented?

Of course, you can buy an already rented property just as well as an unrented one. However, if you are purchasing the property for your own use, an unrented property would definitely be more advantageous. If you already have tenants in the apartment, you can terminate the lease after purchasing the property for your own use. The same applies to capital investors. On the one hand you save time by the tenants time and do not have to look for new ones, are however at the same time bound to the rents. So should you buy rented or unrented? Find out all the advantages and disadvantages here:

• Rented vs unrented

Location, location, location!

Not only the city is important, but also the neighborhood. Where is the nearest hospital? What is the connection like? Is there a lot of vacancy in the neighborhood? And how safe is the neighborhood? All of this affects not only your on-site living experience, but also the value of the property and the purchase price. So what exactly does A, B and C location mean? How can it be determined and how does it affect the purchase price? Learn more here!

• A, B, C position

The perfect location

Depending on whether you are looking for a property as an investment or for personal use, the demands on the location also differ. So what are good locations for your personal investment goals?

• Find location

New construction or existing property?

Both new construction and existing buildings have their respective advantages and disadvantages. The most important question here is: Are you using your property for your own use? Or as a capital investment? Finally, the use of your property also influences your decision. The differences between existing and new buildings, as well as the respective advantages and disadvantages can be found here:

• Existing or new construction?

Age of the property: advantages & disadvantages

More than 2,650,000 properties currently located in Germany were built before 1919, and 5,000,000 of them were built before 1949. Some of these properties are real bargains on the market, and their subsequent sale price can be significantly increased by value-enhancing measures. But what are the advantages and disadvantages of buying an older property? Here is a direct comparison:

• Defects by year of manufacture

Size of house and apartment

How big should the property be? In addition to the location and age of a property, its size ultimately plays an important role. One-bedroom apartment or villa with several bedrooms? Bungalow with basement or rather maisonette? Here we compare living space for owner-occupancy as well as for capital investment. Especially for capital investors who plan to rent out their purchased property, the room layout and the number of square meters are important.

• Optimal size of a property

Ground lease? Yes or no

Some real estate is subject to a ground lease. But what is a ground lease? Can the costs be tax-deductible or even passed on to the tenant? Learn all about ground leases, how they work and their advantages and disadvantages:

• Ground lease

Social binding? Yes or no

In addition to the ground lease, it may be that you will also stumble on the subject of social binding. Everything about your obligations on low-interest loans to the post-commitment period – Is it worthwhile for you to buy a property with social and post-commitment?

• Yes or no? Social binding

Der Beitrag Buying an apartment: Goals, Criteria & Factors – 11-Point Checklist erschien zuerst auf ℄ Real Estates.