Financial Calculator
Rental Yield Calculator
advantages lease
Is buying a property always the best decision? Leasing often offers superior financial flexibility and can increase your return on investment by up to 5%. Discover how to leverage the strategic advantages of leasing for your portfolio.
With access to Google, BORIS, and Deep Research.
Leasing preserves liquidity as high acquisition costs are eliminated and lease payments are tax-deductible as business expenses.
Landlords secure stable, predictable income through long-term contracts and simultaneously benefit from the appreciation of their property value.
Unlike renting, leasing allows the lessee to "draw fruits," meaning to earn profits from the leased property (§ 581 BGB).
Wondering how to maximise the value of your properties without selling them? Leasing is an often underestimated alternative that represents much more than just a transfer of use. Unlike renting, leasing allows the lessee to generate economic returns – known as "usufruct" under Section 581 of the German Civil Code (BGB). For owners and investors, this means a world of strategic opportunities: from securing long-term income and increasing the value of their own portfolio to substantial tax benefits. This article shows you how lease agreements can help you achieve your financial goals faster.
One of the biggest advantages of leasing is the significantly lower initial investment compared to buying. Instead of spending six- or seven-figure sums for acquisition, only the lease payment is due, which can conserve liquidity by over 90%. These freed-up funds can be directly invested into the core business or other high-return assets. Thus, leasing enables start-ups and expanding companies to access prime locations that would otherwise be unattainable. The legal basis for this is clearly anchored in the Bürgerliches Gesetzbuch (BGB). This financial agility is a crucial competitive advantage in a volatile market environment.
For property owners, leasing unused property transforms it into a steady source of income. Lease agreements are often concluded for several years, sometimes even decades, ensuring a high level of planning security. This long-term commitment secures a continuous cash flow, often amounting to 3-5% of the property's value per year. Unlike short-term rentals, long lease terms significantly reduce administrative effort and vacancy risk. Thus, the owner retains possession of a valuable asset that generates stable returns without active involvement. The exact conditions can be specified in detail in a lease agreement on usage possibilities.
A key advantage of leasing lies in the tax treatment of the payments. For the lessee, the lease payments are fully deductible as business expenses. This reduces the taxable profit and directly lowers the tax burden, which can reduce the net cost of usage by up to 30%. In contrast, a buyer can only claim depreciation (AfA) on the building, but not on the land. Here is a list of typically deductible costs:
Ongoing lease payment
Any advance payments
Maintenance costs (depending on contract arrangement)
Insurance for the leased property
This tax deductibility makes leasing an extremely efficient tool for cost optimisation. The exact design of the lease contract is crucial for maximising these potentials.
Unlike rigid rental agreements, lease contracts offer significant flexibility in design. While §§ 581 ff. BGB provide the framework, details such as duration, rent adjustment clauses, and maintenance obligations can be negotiated individually. This allows for tailored solutions that meet the interests of both parties. A clearly drafted contract minimizes the risk of disputes over "proper management." A lease right recorded in the land register protects the tenant even in the event of a sale of the property. This security is of great importance, especially with long-term investments, such as those common with a hereditary leasehold property.
Leasing enables businesses to utilise locations without bearing the full entrepreneurial risk of property ownership. This is particularly advantageous in the hospitality industry or for specialised agricultural operations, where success is highly location-dependent. Instead of tying up capital in a property whose value may fluctuate, the tenant remains flexible. The following points illustrate the risk diversification:
Market Risk: The tenant is not affected by the property's value development.
Flexibility: Once the contract ends, the location can be changed without incurring sale losses.
Focus: Capital is used for operating business rather than for 'concrete gold'.
No Maintenance Burden: Major building repairs usually remain the owner's responsibility.
This strategic risk distribution makes leasing a smart tool for sustainable growth. The advantage is particularly clear when it comes to tiny houses on leased land.
For lessors, leasing offers an elegant way to participate in the long-term appreciation of land while simultaneously generating income. A property in an up-and-coming area can double its value over a 20-year term without the owner having to take any action. The lessee often indirectly contributes to the attractiveness and thus the value of the property through their investments in operation and maintenance. This means the lessor benefits twice: through the lease payment and the appreciation. This is a key aspect when deciding between buying or leasing from an owner's perspective. Unsure what your property is worth? A professional valuation by Auctoa or a conversation with our ImmoGPT can quickly provide clarity here.
The decision between leasing and buying is not merely a matter of taste, but a strategic turning point with significant financial implications. The advantages of leasing – from preserving liquidity and optimising taxes to minimising risks – make it the superior choice for many lessees and lessors. It allows for flexible responses to market changes and the allocation of capital where it promises the highest returns. Careful contract design is essential to unlock its full potential. Thus, leasing is far more than just an alternative to buying; it is an intelligent tool for forward-thinking real estate management.
Wikipedia offers a comprehensive overview of leasehold rights.
The Federal Statistical Office (Destatis) explains leasehold rights in the context of earnings and professions.
The Federal Statistical Office (Destatis) provides a downloadable PDF publication on earnings indices and leasehold interest rates.
The Federal Statistical Office (Destatis) provides information on the consumer price index and its methodology.
The Federal Statistical Office (Destatis) offers explanations on earnings indices and contracts.
Haufe examines leasehold rights from an investor's perspective.
The NWB Verlag offers a database entry on leasehold rights, addressing legal or tax aspects.
The PSD Bank Rhein-Ruhr provides information on leasehold rights from a bank's perspective.
What advantages does leasing offer me as a lessee?
As a lessee, you benefit from low capital commitment, as you do not have to buy the property. Additionally, lease payments can often be deducted as business expenses for tax purposes, providing you with financial flexibility and enabling investment in your core business.
What advantages do I have as a lessor?
As a lessor, you receive regular and long-term secured income without having to relinquish ownership of your property. You also benefit from the appreciation of the land and enjoy minimal administrative work due to long contract terms.
Is a lease contract legally secure?
Yes, lease contracts are regulated in the Civil Code (§§ 581 ff. BGB) and offer high legal security if carefully drafted. For maximum protection, especially in the event of a change of ownership, the leasehold right can be registered in the land register.
What happens if the leased property is sold?
In principle: purchase does not break lease. The lease contract is transferred to the new owner, who is bound by the existing agreements. A leasehold right registered in the land register offers the highest security for the lessee.
How can Auctoa assist in leasing?
Auctoa can help you with a data-driven property valuation to determine a market-appropriate and fair lease rate. Our ImmoGPT chat can also quickly and neutrally answer initial questions about the potentials and risks of your specific property.
Can I build on a leased plot?
Yes, this is the essence of leasehold rights, a special form of lease. You lease the land and construct your building on it. You become the owner of the building, while the land remains in the ownership of the lessor (leasehold grantor).
