Higher property value due to freedom from encumbrances

The value of a property is largely determined by tangible criteria such as location, building, land, and amenities. However, intangible criteria like easements or rights of way also influence its value. Such encumbrances are very important for the buyer, as they ultimately determine the degree of freedom they have over the property.

When you purchase a property, you also inherit any restrictions and encumbrances on it. Besides mortgages and land charges, these include rights of residence or easements. These restrictions and encumbrances are documented in Section 2 of the land register extract.

The right of way

Property 1 is to be sold. It is located on a street. Behind this property is the neighbor's house, Property 2. The latter has no direct access to the street. To reach his property, the neighbor must walk and drive across the property of Property 1. Therefore, he has agreed upon a right of way with the owner of Property 1, allowing him to use this route. He pays the neighbor compensation for this.

What happens to a right of way when it is sold?

Property 1 has a plot size of 500 square meters. To cross this plot, the resident of property 2 needs an area of ​​50 square meters. He paid his neighbor €15,000 for this.

The purchase of property 1 is now pending. A local real estate agent has valued it at €200,000. The right of way reduces this value by €20,000, or ten percent. This leaves a property value of €180,000, to which the compensation payment of €15,000 must be added. In total, the value decreases by €5,000 to €195,000. Therefore, for the right of way to have a neutral effect on the property's value, the compensation would need to be higher.

To be absolutely sure how much compensation for a right of way should be, contact a real estate professional who can advise you on this.

The right of residence

If, for example, children have granted their parents a lifelong right of residence when they have already received the family property during the parents' lifetime, this also affects the property. If it is then to be sold, this will result in a loss of value.

The calculation of this depreciation depends on various factors. These include, for example, the parents' statistical life expectancy and the proportion of living space in the property that they occupy.

A professional real estate agent is familiar with the conditions surrounding easements and rights of way and can alleviate any uncertainties you may have as an owner or buyer. This saves you stress, reduces anxiety, and ultimately increases the value of your property. With a professional valuation by an agent, you're on the safe side, even if easements or rights of way might affect the valuation.

Are you unsure whether there are any restrictions or encumbrances on your property and whether these affect its value? Then ask us! We'd be happy to advise you.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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