Usufruct, right of residence, residential right: the key differences in property valuation

Usufruct, right of residence and residential right are among the rights that can significantly influence the value of a property. Economically, however, they must not be treated alike. A usufruct generally grants the most comprehensive right of use, because the beneficiary may use the property themselves and is often also entitled to draw the income from letting it. A right of residence, by contrast, is usually more narrowly defined and is limited to personal occupation. A residential right typically concerns the use of specific rooms or a particular dwelling. From this alone it follows that the economic burden on the ownership can vary considerably depending on the right.

For the valuation, it therefore always depends on the specific arrangement. The relevant factors include, among others, the content and scope of the right, the areas concerned, the term, the age of the beneficiary, and the question of whether the use is merely personal or also economically exploitable. Particularly in cases of gift, anticipated succession, inheritance or transfers within the family, a precise distinction is important. Anyone who treats the terms as equivalent often underestimates the differences in their effect on value. A sound market value appraisal must therefore capture not only the property, but also the respective right in its specific legal and economic significance.