I use a lot of words that I don't usually hear in real estate investment.Leasehold is one of them, and although it may seem difficult, it is a very important concept that must be understood in real estate investment.You may have seen the word "building with leasehold" in an advertisement.And have you ever felt that leasehold land is cheaper than ownership land?This time, I would like to explain about leasehold rights.
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What is a leasehold
It is a concept in the Land Lease and House Lease Law, which is a law for the purpose of owning buildings that stipulates superficies, land leasing, and building leasing.When buying real estate, both the land and the building are often bought and sold, but if the building is built on rented land, the person who owns the building and the person who owns the land are separate.
Leasehold is literally the right to rent the land, so in the case of a “building with leasehold”, the land belongs to the landlord and the buyer has ownership of the building.Leasehold land is called leasehold land.
In this way, there are cases where the owner of the land and the building are different in real estate in the same place, so you need to be careful when purchasing.
What are Superficies and Lease Rights?
Ground rights
The right to use land to own a work on someone else's land.Structures include not only buildings but also tunnels, wells and bamboo groves.In addition to using the land, the surface right holder can transfer the surface right or lease the land, and by registering the surface right, the land owner claims the surface right to the third party who transferred the land. can.A mortgage can also be set up without the permission of the land owner.
Superficies are called "property rights" because they have the property of being able to directly control certain things and rights.
Lease right
Refers to the rights of the lessee under the lease contract.You can use the property (building or room) within the scope of the contract, but you are obligated to pay the rent to the lessor.It is not possible to transfer, sublease, or register the rental right without the consent of the lessor.In civil law, it is called a “debt”.
Since it is a bond and liability relationship, it is necessary to pay a transfer approval fee and a rebuilding approval fee when transferring the leasehold or rebuilding.
Advantages and disadvantages of leasehold buildings
The advantage is that you can get it cheaper than ownership in a similar property.This is because the price will drop to about 7% and there will be no real estate acquisition tax, property tax, or city planning tax.It is necessary to pay the land use fee (land rent) to the lessor, but it can be recorded as an expense.On the other hand, the disadvantage is that you do not own the land, so you cannot use it as collateral.A building with a low collateral valuation is less likely to get a loan.Also, as mentioned above, you must obtain permission from the landlord before rebuilding or selling.There are also land rent increases and payment of renewal fees when the contract is renewed.
On August 4, 8, the land and house lease law was revised.
Note that land leases established before August 4, 8 are subject to the old law, and after that the revised law is applied.
The former Land Lease Law stipulated the contract period for land when owning a building. If the contract did not specify, the duration of the contract was 30 years or more for solid buildings, 60 years for non-sturdy buildings, and 20 years for non-sturdy buildings. 30 years unless otherwise specified.
The old Land Lease Law was beneficial to the lessee, and when a request was made to vacate the land, it was not accepted without a justifiable reason. is said to be connected toUnder the old law, there were many cases in which evictions were difficult, so the land and house lease law was enacted to clearly determine the deadline.It is a rule to return the land according to a predetermined deadline.
However, the old law applies to leasehold rights that were signed before the land and house lease law came into force, and in order to switch to the new law, the contract itself must be renewed. You have to check whether
Types of New Land and House Lease Law
Ordinary land lease right
Unlike the old law, it can be legally renewed, and there is no distinction between solid buildings and non-rigid buildings.
Term leasehold
It cannot be legally renewed, and at the end of the term, the leaseholder must clear the land and return it to the landlord.
It is further divided into the following three.
General fixed-term land lease right
The duration is 50 years or more, and it is necessary to clear the land and return the land when it expires.
Land lease right with special contract for building transfer
It is a contract with a duration of 30 years or more, under which the lessor promises to purchase the building when it expires.
Business fixed-term land lease
The purpose is to use it for business, and the contract is for a period of 10 years or more and less than 50 years.A notarized deed concludes the contract.
As with ordinary land leases, the land must be cleared and returned when the lease expires.
This time, I told you about the advantages and disadvantages of leasehold land.Each person has their own style in real estate investment, and you will have to make an investment strategy that suits you.If it is difficult to decide whether to operate with a leasehold or stick to ownership, why not consider consulting with a professional?
Summary
- The right to lease land and build a building is called a leasehold.
- There are two types of leasehold rights: superficies and leasehold rights.
- Superficies are the rights to use land to own structures on someone else's land.
- The right to lease allows the property to be used within the scope of the contract, but there is an obligation to pay the rent to the lessor.
- The advantage of a building with a leasehold is that it can be obtained cheaper than ownership with a similar property
- Disadvantage is that you need to obtain permission from the landlord when rebuilding or renewing, and you also have to pay land rent.
At Rich Road Co., Ltd., we will consistently support all aspects of investment real estate, from complete beginners to experienced people, from a wide range of real estate selection, loan consultations, post-purchase management, and renovations.
