Do you own land and wonder what a realistic and fair lease price is? The prices for leasing land are constantly rising, but the differences depending on region and use are enormous. This article shows you how to determine the value of your land based on data and avoid pitfalls in the lease agreement.
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The topic briefly and concisely
The lease prices for agricultural land increased by 47% from 2013 to 2023, with arable land (€407/ha) being almost twice as expensive as grassland (€212/ha).
Regional differences are substantial: The lease prices range from €99/ha in Saarland to €560/ha in North Rhine-Westphalia.
The ground rent for long-term lease agreements is usually 3-5% of the current land value per year and should be contractually protected against inflation.
The decision to lease a property raises a central question: What should the lease price be? In 2023, the average lease fee for agricultural land in Germany was 357 euros per hectare, representing a 47% increase compared to 2013. However, this average value conceals significant regional and usage-based differences. As an owner, perhaps through inheritance, you face the challenge of setting a market-appropriate price that ensures you a stable return without deterring potential tenants. Setting the wrong price can cost you thousands of euros over the years. This guide provides you with a well-founded orientation based on current figures, helping you to determine the right prices for leasing your property and optimize your income.
Market Factors: What Determines the Lease Price of Your Property
The price you can achieve for leasing your land depends on much more than just the mere size. The soil quality, expressed in soil points, is a crucial factor, as well as the location and regional demand. In North Rhine-Westphalia, for example, the highest lease prices for agricultural land in Germany are achieved with an average of 560 euros per hectare, while in Saarland only 99 euros are customary. The difference here is therefore more than 460% solely due to the regional location. Another significant driver is the intended use: A site for a solar park can generate lease income of 3,500 to 5,000 euros per hectare per year, multiple times that of agricultural leases. The contract duration also plays a role; longer lease durations often justify a higher price, as they provide the tenant with more planning security. These factors form the basis for any serious evaluation of land factors.
The analysis of these criteria is the first step in setting a competitive and fair lease price. Next, we will look at the specific prices for agricultural land.
Prices for agricultural land: Arable land clearly surpasses grassland
Within agricultural use, there are significant price differences that you, as a lessor, need to be aware of. In the national average for 2023, the lease price for arable land was 407 euros per hectare, while only 212 euros per hectare were paid for permanent grassland. Thus, arable land is on average 92% more expensive to lease than grassland. This difference reflects the higher yield potential and the more diverse cropping possibilities of arable land. Since 2013, lease fees for arable land have even increased by 111%, underscoring the high demand.
The regional differences are also striking:
Leaders: In North Rhine-Westphalia, the lease prices for arable land reached as high as 659 euros per hectare in 2023.
Mid-range: In Bavaria, prices averaged 415 euros per hectare for all agricultural lands.
More affordable regions: In Thuringia, the median lease price for arable land was around 232 euros per hectare.
These figures show how important a precise analysis of land prices is for your specific region. However, not only agriculture but also commercial use offers lucrative opportunities.
Commercial Leasing: A Lucrative Field with Its Own Rules
The leasing of land for commercial purposes, such as logistics halls, production sites or retail, introduces a different pricing segment. Here, the lease rent is less frequently calculated per hectare, but usually per square metre and often as a percentage of the land value (standard land value). Typical lease yields are oriented towards the general capital market and often range between 4% and 6% of the market value. With a land value of 500,000 euros, an annual rent of 25,000 euros (at 5%) could be achieved. The exact amount strongly depends on the locational advantages, such as transport connections, surrounding infrastructure, and the economic potential of the site. Naturally, a plot in a thriving commercial area commands a significantly higher price than a remote area. For a well-informed decision, a professional valuation report is indispensable. Leasing to companies also requires more detailed contracts that cover aspects such as building permits, contaminated sites, and demolition obligations. This is distinct from leasing for private gardens and recreation.
Leisure and garden plots: Small areas, local prices
Different standards apply to the leasing of garden land or recreational plots. The areas are generally much smaller, often only 300 to 1,500 square metres, and the prices are heavily influenced by local conditions. A flat-rate figure per hectare is not meaningful here. Instead, the prices are based on the customary local rental rates for allotment gardens. In urban areas, demand can be high, driving prices up. A lease price of 0.35 to 1.00 euros per square metre per year is a common range in some regions. For a 500 m² garden, this would equate to an annual rent of 175 to 500 euros. Important price factors here include accessibility, the availability of utilities (water, electricity), and the permitted use according to the development plan. Make sure the lease agreement clearly stipulates which structures (e.g. a garden shed) are allowed and who is responsible for maintenance. A special form of long-term leasing is leasehold.
Special Case of Leasehold: Here's How Ground Rent is Calculated
The hereditary building right, often colloquially referred to as a leasehold, is a special form of long-term land use, usually over 50 to 99 years. Instead of a purchase price, the user pays an annual ground rent. This usually amounts to between 3% and 5% of the current land value. The calculation is transparent:
Land value of the plot x ground rent rate = Annual ground rent
An example: With a land value of 300,000 euros and an agreed interest rate of 4%, the annual ground rent amounts to 12,000 euros, which equates to 1,000 euros per month. It is important to have a contractual arrangement for adjusting the interest rate. A value adjustment clause is often agreed, linking the ground rent to the development of the consumer price index, allowing for an adjustment every three years. This protects you as the lessor against inflation. The precise cost comparison between purchase and lease is crucial for the user. The question now is how to set the lease price for your specific plot.
Setting Your Lease Price: A Step-by-Step Guide
To determine the optimal lease price, you should proceed systematically. Relying solely on intuition rarely leads to a market-appropriate result. Start by gathering objective data. The first step is to determine the standard land value through the local expert committee portal (BORIS). This value serves as an important basis, particularly for commercial leases or building rights. For agricultural land, the soil points and the average lease prices of your federal state, published by the Federal Statistical Office, are crucial.
The following steps will assist you in the calculation:
Define usage type: Is it arable land, grassland, commercial, or recreational area?
Research land value and quality: Request an extract from the land registry to obtain the exact land valuation.
Analyse regional comparative prices: Use the statistics from the state and federal offices.
Evaluate particularities: Consider factors such as layout, slope location, access routes, or existing structures.
Determine negotiation room: Set a price slightly above your bottom line to remain flexible in the discussion about the property price.
If you are uncertain, the ImmoGPT chat from Auctoa can provide an initial, data-driven assessment. This leads us to the final contract design.
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A carefully drafted lease agreement is your most important safeguard. Agricultural lease law is governed by paragraphs 585 to 597 of the Civil Code (BGB), but allows for a lot of room for individual agreements. A written contract is strongly recommended to avoid future conflicts. In Thuringia, lease agreements must even be reported to the competent authority within one month. A key point is the exact description of the leased object, including the plot number and size. Clearly establish the lease term and notice periods. In agricultural usage, it is common practice to pay the lease annually in advance. Also, clarify who is responsible for which maintenance measures and which usage is exactly permitted. A clear regulation of usage options prevents misunderstandings.
Conclusion: Data-driven pricing is the key to success
What factors most strongly affect the land lease prices?
The three most important factors are location (federal state, proximity to urban centres), type of use (agriculture, commercial, solar, leisure), and soil quality (soil points for agricultural land) or the standard land value. Location alone can lead to price differences of over 400%.
Do I need to pay tax on lease income?
Yes, income from leasing a property must be declared and taxed in the tax return as 'income from renting and leasing'. Your personal income tax rate applies to it.
How can I determine the exact value of my land for rent pricing?
For precise value determination, you can check the standard land value through the BORIS online portal of your federal state. For a detailed analysis that considers all the specific characteristics of your property, a KI-supported appraisal like that of Auctoa or a classic appraisal is recommended.
What should definitely be regulated in a land lease agreement?
A lease agreement should always be in writing and clearly regulate the following points: exact designation of the property, amount and due date of the lease, duration of the contract, notice periods, permitted use, maintenance and any cosmetic repairs, and a value safeguarding clause for adjusting the lease.
Can the lease price be increased during the contract term?
Yes, if it has been agreed in the lease agreement. Value safeguarding clauses (index clauses) that link the lease price to the inflation rate (consumer price index) are common. Such an adjustment is usually possible every three years for long-term contracts.
Who pays the property tax – tenant or landlord?
Property tax is a public burden that rests on the property. The debtor of the property tax to the municipality is always the owner (landlord). However, it can be agreed in the lease agreement that the tenant reimburses the costs to the landlord as part of the additional costs.
Additional useful links
A press release from Destatis (Federal Statistical Office) provides current statistical data on lease prices and land values.
The Federal Ministry of Food and Agriculture (BMEL) provides comprehensive statistics on lease prices and purchase values of agricultural land.
BORIS-D (Germany's Land Value Information System) enables access to the official land reference values for the whole of Germany.
Additional tables from Destatis (Federal Statistical Office) offer detailed data on purchase values of properties and real estate price indices.
The Sparkasse provides information in its guide about current property prices and acquiring home ownership.
The Federal Agency for Cartography and Geodesy (BKG) offers official geodata and maps that are useful for accurate land location determination.
The German Farmers' Association publishes in its situation report detailed analyses and data on the land and lease market in agriculture.
FAQ
Which factors most strongly influence land leasing prices?
The three most important factors are the location (federal state, proximity to urban centres), the type of use (agriculture, commercial, solar, leisure), and the soil quality (soil score for agricultural land) or the standard land value. The location alone can lead to price differences of over 400%.
Do I have to pay tax on rental income?
Yes, income from leasing a property must be declared and taxed in your tax return as 'income from letting and leasing'. Your personal income tax rate applies to this.
How can I determine the exact value of my property for setting the lease price?
For an accurate property valuation, you can check the standard land value using the BORIS online portal of your federal state. For a detailed analysis that takes into account all the specific characteristics of your property, an AI-assisted valuation like the one from Auctoa or a traditional appraisal is recommended.
What should definitely be regulated in a lease agreement for a plot of land?
A lease agreement should always be in writing and clearly regulate the following points: precise designation of the property, amount and due date of the rent, term of the contract, notice periods, permitted use, regulations on maintenance and any cosmetic repairs, as well as a value protection clause for the adjustment of the rent.
Can the lease price be increased during the contract term?
Yes, if this has been agreed in the lease agreement. Value protection clauses (index clauses) are common, which link the lease price to the inflation rate (consumer price index). Such an adjustment is usually possible every three years in long-term contracts.
Who pays the property tax – tenant or landlord?
The property tax is a public charge that lies on the property. The debtor of the property tax to the municipality is always the owner (landlord). However, it can be agreed in the lease agreement that the tenant reimburses the costs to the landlord as part of the ancillary costs.
