Development costs: the underestimated cost factor for property buyers

Development costs
This can be expensive: property buyers too often underestimate these costs

Property development costs can also include green spaces

© Werner Dieterich / Imago Images

Many real estate buyers pay attention above all to the purchase price. But if you don't monitor real estate development costs, you may be in for a rude awakening, even after decades.

by Imke Heron

This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read on www.capital.de. Capital belongs like this star on RTL Germany.

The legal situation is clear: if you want to build a house on land, you must first develop the building land and make the land accessible. This is what the Building Code (BauGB) says.

Four conditions must be met: “A property can only be developed if connection to the public road network, electricity and water supply as well as sanitation are ensured,” explains Norbert Maier, real estate expert and financing specialist of construction at Dr. Small in Regensburg. “Only then is a property considered fully developed in terms of transportation and technology. » However, connection to gas lines, telephone or cable networks is not absolutely necessary.

Public and private development

There are essentially two types of development, each of which has one-time costs: public development and private or internal development. The difference is geographical: “Public development applies up to the property line, private development from the property line to the house,” summarizes Maier.

While the public development of building land is generally the responsibility of the municipality in which they are located, building owners must organize the private development of their property. However, the municipality is also involved here because it must first approve the relevant applications. The following applies to all developments: The owner bears the costs. He will later receive an invoice for the work organized by the municipality.

Big difference in costs

The costs of developing a property can vary enormously, Maier knows: “Prices depend on municipal and regional regulations, which are different everywhere.” Other factors such as the location and proximity of possible main connection points, the size of the property, the height and the type of use of the property in question also play a central role.

However, there is usually some guidance: “In many laws, at least the scope of the measures to be charged is described in detail. Costs of acquiring land, bike paths, sidewalks, collector roads, parking areas, green spaces and much more. are often found in the list of possible development costs,” explains Maier.

In total, property buyers should expect development costs in the five-figure range. “For the vast majority of new buildings, the total development costs are between 15 and 40 euros per square meter,” writes Folkert Siemens on the Haus.de website. Many real estate experts cite a sum between 10,000 and 30,000 euros as the house number that will be charged on average for the development of a building plot.

Some useful average values ​​can be found on Finance Scout24: Thus, development costs for electricity usually amount to 2,000 to 3,000 euros, while 2,000 to 5,000 euros are due for a water connection . The cost of a gas connection is around 2,000 euros, while telecommunications development costs are often less than 1,000 euros.

Development contributions: Late additional payment possible

Important to know: municipalities do not always invoice development contributions on time or in full. “In some cases, development costs may arise even after the property has been completed, for example if the municipality has not yet been able to conclusively determine the final costs,” explains Dr. The expert Klein Maier.

Or the work is not yet completely finished: “An asphalt road is not always a fully constructed development system. If, for example, the technically necessary infrastructure of a local road is missing, it must be classified as not definitively completed”, emphasizes Maier. An example from Neuss shows what strange results this circumstance can bring. Here, some residents of Selikumer Weg were recently asked to pay for the expansion of a street that had existed for decades – but which was not completed because the once agreed rotary hammer was still missing. Cost: 360,000 euros.

In addition to late payment requests, additional charges may arise over time that may not have been anticipated when the property was purchased. The key word here is “contribution to improvement”. According to Maier, these sums can be collected later for measures that bring benefits to a property, such as a more modern water supply or drainage system. However, there is no national regulation: “Each federal state has its own tax regulations, which can be found in the respective municipal tax laws or in the laws on contributions to municipal improvements “, explains Maier.

Therefore, property buyers should pay attention to how the assumption of development costs is regulated in the contract. According to the expert, clauses are common in notarized contracts that transfer development costs to the seller until the day of transfer. Upon transfer of ownership, the purchaser then bears the risk of all subsequent studies and future modifications to the development facilities. However, the notary can also design these clauses differently.

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