Social binding & post-binding: favorable housing and limited rent

Elisa — Wed, 01 Dec 2021 13:45:05 +0000

Social binding – Before the housing search of your first condominium one should know everything about the topic social binding in the housing. Here you will learn all the pros and cons and what you need to know about everything from low-interest loans by public authorities for social housing, to obligations, to the grace period.

Back: Ground Lease Next: equity

Social binding: What is it anyway?

For housing construction, social binding means that low-cost housing is subsidized by public funds. This means that there are low-interest loans or subsidies for investors in exchange for committing to affordable rents. The catch? Only people with a housing entitlement certificate are allowed to rent these apartments.

Affordable housing through public funding
Very good conditions for loans or grants
Rent for persons with a certificate of eligibility for housing

Rebinding

Buyers are tied to social housing until the public loans have been repaid. However, due to the post-commitment period, one has to wait 10 more years after repayment until the social commitment ends.

Commitment to social housing until loan is repaid

Limited rent

The cost rent slows down the maximum rental price of the apartments. The housing construction is therefore price-linked, which guarantees that only the cost rent can be demanded from the tenants. The rent may be increased in this period only every 3 years, according to the consumer price index.

Maximum rental price limited by “cost rent

Social bond summarized

Here again everything you need to know about social binding!

Affordable housing through public funding
Very good conditions for loans or grants
Obligation to rent to low-income persons
Maximum rental price limited by “cost rent
Post-commitment period ends only 10 years after full repayment of public loans

The next step: equity

Regardless of whether it is for personal use or as a capital investment, the first thing to think about for any type of real estate is the financing. Here, equity capital is an important topic, from the use of equity capital to the difference due to tax deductibility of the interest on the loan. The big question here is, how much equity do you need if you include all costs from the purchase price to the ancillary purchase costs? Here you will learn everything about financing and equity.