On March 20, 2024, the National Council passed the measures of the "Housing and Construction Package." This is intended to boost the economy and encourage longterm investments in real estate. Above all, those who wish to fulfill their dream of of owning their own home in the near future should benefit from the new regulations. A key measure of the package is the temporary exemption from the court fee for land registry entries when purchasing a home after March 31, 2024. However, the exemption is limited in time and subject to certain conditions. Therefore, good information and planning as well as the correct implementation are essential for claiming the exemption. We provide an overview of the new regulations and inform about the necessary conditions that must be met to take advantage of the exemption. 

Temporary removal of the land registry entry fee for the purchase of a home after March 31, 2024

Currently, the purchase of a property incurs a land registry entry fee of 1.1% of the property's market value. When registering the acquisition of a mortgage, an additional fee of 1.2% of the mortgage amount must be paid.
New provisions for the acquisition of residential properties will temporarily apply from April 1, 2024.

Registration fee for the acquisition of ownership rights or building rights

• Who benefits? The exemption only applies to legal transactions for a consideration regarding the acquisition of residential properties for personal use ("urgent housing need")

The acquisition of ownership or building rights to a property with a (already constructed or yet to be constructed) building that serves the urgent housing need of the purchaser is exempt from the court entry fee up to a valuation basis of €500,000. The exemption applies to legal transactions for a consideration concluded after March 31, 2024. Therefore, acquisition by inheritance or donation is not covered by the exemption. A condition for the exemption is that the newly built or acquired property is used by the purchaser himself and serves the satisfaction of his urgent housing need. The housing need is considered urgent if the registrant wants to use the new residence as a home and gives up the previous residence. The urgent housing need must be proven by a registration confirmation. The proof can be provided subsequently if the proof is not available at the time the fee is due. In the case of self-calculation, therefore, the fee can initially be stated as "0". Within three months after the handover or completion of the new residence, the registration confirmation for the registration at the new address must be submitted to the land registry court. In addition, the land registry court must be provided with proof that the residential right at the previous home has been given up (e.g., by confirmation of the previous accommodation provider or by proof of the sale of the previous condominium). The proof must be submitted to the land registry at the latest five years after the land registry entry, otherwise the entry fee is to be prescribed. 

• Exemption applies to the first €500,000; no exemption for "luxury properties"

The exemption from the court entry fee, however, applies only up to a valuation basis of €500,000. For a property value or a mortgage amount exceeding €500,000, therefore, the first €500,000 are exempt from fees, the exceeding part of the property value or mortgage amount is subject to fees. If the valuation basis exceeds €2 million ("luxury property"), there is no fee exemption (not even for the first €500,000). 

• Acquisition by multiple owners or acquisition of multiple properties

The beneficiary does not have to be the sole owner of the property. The co-owner is also  favoured if the residence serves his urgent housing need. Thus, partial benefit is possible if the conditions are met only by one of the co-owners.

If several residential properties are acquired at the same time, the fee exemption can only be claimed for the residence that serves to satisfy the urgent housing need of the purchaser.

•  It pays to be quick: the exemption is limited to 2 years

The fee exemption only applies temporarily for a period of 2 years: Land register applications that are received by the land registrer court after June 30, 2024, but before July 1, 2026, are exempt from the court registration fee. However, it is sufficient if a prenotation for the acquisition of ownership is applied for within this period. The fee-exempt registration of the ownership right can then be applied for even after July 1, 2026. The same applies to the annotation of the ranking order for the intended mortgage and for the registration of ownership in the case of an annota-tion of the granting of condominium ownership according to § 40 para. 2 WEG.

Therefore, particular caution is also required in the handling of BTVG projects: The land registry applications and the corresponding proofs must be submitted to the land registry court under reference to the legal regulation and especially within the correct time window. The annotation of the trustee's ranking order is not sufficient for claiming the exemption.

• Attention: Subsequent elimination of the fee exemption possible

Plans can change, also with regard to your own housing situation. But beware: The exemption from fees may be subsequently cease to apply if, within five years of the transfer or completion of the residence, either the right of ownership is relinquished (i.e. the residential property is sold) or the urgent need for housing no longer applies. In this case, the fee must be charged subsequently. The occurrence of such an event must be reported to the land registry court or the enforcement authority within one month of its occurrence. It is therefore important to clarify the legal framework at an early stage if you are planning to move house or buy a new home.

The acquisition of a building right (“Baurecht”) or a building erected on land owned by another person (“Superädifikat”) can also be exempt from fees

From April 1, 2024, the acquisition of a building erected on land owned by another person (“Superädifikat”) or the acquisition of a building right (“Baurecht”) is also exempt from the court registration fee if the Superädifikat or building right serves an urgent housing need.

Borrowers will also benefit: The registration of liens is also exempt from fees

The registration of a lien always secures a paid service, i.e. the registration is always based on a paid legal transaction. From April 1, 2024, the registration of liens will also be exempt from fees if they are registered as security for loans taken out to acquire or renovate a property including buildings that serve an urgent residential need. However, please note: The prerequisite for the exemption is that the secured amount was taken out exclusively or at least over 90% either for the acquisition of the property or for the construction or renovation of the building on it, which serves to satisfy the urgent housing need. The loan taken out may therefore only be used to acquire the property on which the respective residential building is located or is to be built, which serves the urgent need for housing, or to finance the renovation of the residential building. If the fee exemption is to be used, a maximum of ten percent of the loan amount may be used for other purposes (e.g. for the purchase of furnishings).

How can the exemption be claimed?

The prerequisite for the fee exemption is that it is claimed in the land register application with reference to the legal basis - and above all in good time (i.e. within the correct time window). If this has not been done, the fee exemption must be claimed at the latest on the occasion of the presentation against a payment order. It is therefore important to obtain information and appropriate legal advice in good time in order to claim the exemption.

Summary

The exemption from the land register entry fee only applies to residential properties for own use that serve to satisfy the purchaser's urgent housing needs. The first € 500,000 are exempt from fees, provided the value of the property or the pledged amount does not exceed € 2 million. The fee exemption can be claimed for land register applications submitted to the land register court after June 30, 2024 but before July 1, 2026 by referring to the statutory provisions. The exemption from fees can also be claimed for the acquisition of a building right or a “Superädifikat”, provided that this serves to satisfy the urgent housing needs of the purchaser.

Statement 

The legislative amendments outlined above are only one aspect of the housing and construction package adopted by the National Council. Other measures include tax incentives for ecological renovations and the extension of the "housing umbrella". In addition, the federal government will grant a special-purpose subsidy of € 1 billion to the provinces in the years 2024 to 2026 for the creation and renovation of affordable housing.

Investor interest in the measures has been aroused for the time being and the acquisition of residential properties has thus at least moved further back into the focus of investors. It remains to be seen whether the measures will also have the hoped-for effect in the longer term with regard to the acquisition of residential properties and stimulate the economy.

Anyone who has been thinking about buying their own home for some time should find out about the legal framework in good time. Correct information - tailored to the specific individual case - good planning and correct implementation are essential to ensure that the benefits can actually be claimed.