Building Lease in Geneva (DDP): Definition, Ground Rent and Duration

The DDP separates ownership of the land from ownership of the buildings on it: you own your building but not the land, in exchange for paying a ground rent to the landowner.

This article presents this right, how it works, the ground rent and its duration, what happens to the building at expiry, and the value of acquiring a property under a building lease in Geneva. It then looks at the purchase, financing and registration in the land register.

What is a building lease (droit de superficie, DDP)?

A building lease is an easement. A landowner grants a third party the right to build on their land (article 779 CC). It departs from the principle of accession, according to which anything built on a plot of land belongs to the owner of the land (articles 667 and 671 CC).

The leaseholder owns the buildings. The land remains the property of the landowner. Established for at least 30 years and transferable, this right becomes a distinct and permanent right (DDP).

It is then entered in the land register like a property, on its own sheet. As such, it can be sold, mortgaged or passed on through inheritance, almost like ordinary property.

How does a building lease work?

A building lease establishes a clear split: the landowner remains the owner of the land, and the leaseholder, for the agreed term, owns the structure, in exchange for paying a ground rent. The constitutive deed must be executed in the form of a notarized deed, before a notary, before being entered in the land register (art. 779a CC).

Once registered as a distinct and permanent right, the DDP has its own legal life: it is transferable, passes to heirs and can serve as a mortgage lien (art. 779 CC). The essential terms are set out in the contract: the amount and indexation of the ground rent, the intended use of the buildings, what happens to the structure at expiry, and the grounds for any early termination. The clauses relating to these points bind successive acquirers of both the right and the land.

What is the ground rent of a building lease?

The ground rent is the periodic payment made by the leaseholder to the landowner. Its amount is freely determined by the parties: no legal scale applies, and it must be set out in the notarized deed (article 779a of the Civil Code).

In practice, it is most often calculated by applying an interest rate to the value of the land, and is periodically adjusted, for example every five to ten years, often based on the consumer price index.

The landowner may require, for their security, a guarantee: a statutory lien encumbering the building lease, up to a maximum of three years' worth of ground rent (article 779i of the Civil Code). As a lasting charge, the ground rent must be factored into any financing plan.

What is the duration of a building lease?

The law caps the duration of a building lease: it cannot be established for more than one hundred years as a distinct right (article 779l of the Civil Code). At the other end, a term of at least thirty years is required for it to be registered as a distinct and permanent right. In practice, the terms chosen often range from seventy-five to one hundred years, aligned with the building's lifespan.

The right can be extended, in the form prescribed for its establishment (article 779l of the Civil Code), but any commitment made in advance on this point is void. Prudence dictates addressing this early: rather than waiting until the remaining term is short, which complicates financing and resale, renewal negotiations typically begin ten to fifteen years before expiry.

What happens to the building at the end of the building lease?

Upon expiry of the building lease, the buildings revert to the owner of the land and become an integral part of the land (article 779c of the Civil Code). The leaseholder loses ownership of the building, but receives fair compensation (article 779d of the Civil Code). This compensation is left to contractual discretion: the law merely requires that it be fair and sets neither the method of calculation nor the amount.

In practice, it corresponds to a fraction of the value of the building at expiry, often in the order of seventy to ninety percent, negotiated as early as when the right is established. The right can end earlier than planned if the leaseholder seriously fails to meet their obligations, for example if they stop paying the ground rent (article 779f of the Civil Code), again against payment of compensation.

Should you buy a property under a building lease?

It depends on your plans and the remaining term of the right. Buying under a building lease means acquiring the building, but not the land. The appeal is financial: the equity outlay and purchase price are much lower than for full ownership, making it easier to become a property owner. In exchange, the leaseholder pays a recurring ground rent, does not benefit from any increase in the land's value, and returns the building at the end of the term.

• the remaining term of the right
• the amount of the ground rent
• the return compensation provided for
• the holding horizon

A long remaining term and a moderate ground rent make the DDP attractive; a short term complicates bank financing and weighs on resale. The simulator below allows you to compare the equity outlay and ground rent of a DDP purchase with those of a conventional acquisition.

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How to buy or finance a property under a building lease in Geneva?

Now that the mechanism is understood, it remains to see how, concretely, to acquire a property under a building lease and register it in the land register. As with any real estate acquisition, a notarized deed is required, and a careful reading of the building lease contract is essential. It defines the ground rent, the term and the conditions for return of the building.

These clauses determine the true value of the purchase just as much as the price does. How the purchase of a DDP property in Geneva proceeds and how the right is registered in the land register are detailed below.

How does the purchase of a DDP property in Geneva proceed?

Buying a property under a building lease follows the same course as a conventional real estate acquisition, with heightened attention to the contract. The transfer deed is signed before a notary, then entered in the land register. Before committing, the buyer examines the remaining term of the right, the amount and indexation of the ground rent, plus the return compensation provided for at expiry.

These factors determine bank financing just as much as resale value. Otherwise, the steps to buy in Geneva, from offer to signing, apply just as much as for a property in full ownership.

How is a building lease registered in the land register?

A distinct and permanent building lease is registered in the land register twice, in a complementary way. It appears, on the one hand, as an easement on the sheet of the encumbered land, the landowner's plot. When it meets the characteristics of a DDP, it is also registered as a property in its own right, on its own sheet and with its own number (article 779 of the Civil Code).

It is this double registration in the land register that makes it possible to sell, mortgage and transfer it. The buyer has every interest in consulting the sheet for the right in order to verify its term, ground rent and charges.

Can a building-lease property be mortgaged?

Yes. When registered as a distinct and permanent right, a building-lease property can be mortgaged just like an ordinary property. This makes it possible to finance its acquisition with a mortgage loan (article 779 of the Civil Code).

Banks naturally pay close attention to the remaining term of the right: the closer the expiry date, the harder financing becomes to obtain. The return of the building to the landowner, through the operation of the right of accession, indeed causes the value of the property to decline as expiry approaches. A comfortable remaining term is therefore decisive for hoping to obtain a loan.

Is a building lease cheaper to buy?

Yes: to buy, a building-lease property costs less than a full-ownership property, because the buyer pays only for the building, not the land. The initial equity outlay is reduced accordingly. This saving, however, comes with a lasting trade-off: the ground rent, due every year, and the absence of any increase in the value of the land, which reverts to the landowner.

Over time, the comparative cost of the two arrangements depends on the level of the ground rent and the holding horizon. A simulator makes it possible to compare these two options side by side, with figures.