Buying a Germany property
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From finding a house in Germany to signing the contract, we take you through the process of buying a home in Germany.
While most countries swing strongly in favour of either renting or buying your home, the options are balanced in Germany, with just around half the population owning their own homes, one of the lowest rates in Europe. Average purchase prices for a property in Germany are relatively low for central Europe at EUR 1,500–2,500 per square metre. The average price for a 30 square metre property (a small apartment) is EUR 60,000, while a 100 square metre apartment averages around EUR 250,000. Prices are typically up to 50 percent higher in the major cities, such as Berlin, and Munich is the most expensive city in Germany.
House prices and rents have risen dramatically in Germany in the last decade, with rents rising 15 percent between 2008 and 2013 and house prices rising 23 percent in the same period. German property has been seen as a stable, reliable investment by both local and overseas investors, and the market has been largely resilient in the wake of the 2008 financial crisis and even showing signs of a housing boom as a result.
Although property prices have traditionally been relatively stable in Germany, popular urban neighbourhoods are showing signs of growth; in 2016, the most expensive German property sold was in Berlin's central Mitte district at EUR 19,018 per sqm, beating Hamburg's record of EUR 19,000 per sqm.
There are no restrictions to foreigners buying property in Germany. You may buy property in Germany even if you are a non-resident and not an EU national.
How to find a German property
Properties may be sold either privately or through an estate agent (Immobilienmakler). In either case, the onus is usually on the buyer to find a property they are interested in and then approach the owner or their agent. This also means that estate agents are usually paid by the seller, but this is not always the case. As agents' fees are typically 3–7 percent of the purchase price, it's important to check who is paying them. You can find an estate agent through their national organisation, the IVD.
Choosing a property
Germans typically expect to buy a property and live in it for an extended period, or for life, so take time making the decision. Turnover in attractive areas can be low, so it's best to give yourself a year or more to find and buy the perfect home.
Buying a property in Germany
Expect to spend a significant period house hunting, but once you've found a property it can take just over a month to complete the deal. The steps are typically as follows:
- Investigate mortgages and get an offer in principle.
- Find a suitable property.
- Make an offer.
- The notary (notar) will draw up the sale contract.
- Finalise the mortgage.
- Sign the contract.
- Notary registers the sale.
- Four weeks later, you must pay the property sale tax.
It's important to note that signing the contract isn't enough to transfer the property. The property must also be registered, which the notary will do. At this point, the government will check that there are no outstanding issues regarding the sale. The notary will already have made a check, so this rarely raises an issue, but if it does, the property transfer will not be complete until the knots are untangled. For this reason, many people choose to use the notary as an escrow. In this case, the sale price is transferred to the notary's account (notaranderkonto) before being released to the seller.
You are legally required to use a public notary (notar) to complete the sale of a property. The notary will act as a middleman or arbitrator, and should be impartial.
You should expect to put down a significant deposit when you buy a home in Germany. A minimum deposit of 20 percent is standard, however expats have been asked by lenders for deposits of 40 percent as they are seen as higher risk. You may also be asked to provide evidence of regular savings over the last several years.
When buying a property in Germany, you can expect to pay most of the costs. Typically, the seller will pay the estate agent, however if you have used a buyer's agent or the agent splits their fee, the buyer may still have to pay this cost.
- Property transfer tax (grunderwerbssteue) of 3.5–6.5 percent;
- Notary's fees 1.2–1.5 percent;
- Registration fees 0.8–1.2 percent;
- Estate agent's fees, if shared, of 1.5–3 percent, plus VAT at 19 percent.
Apart from the estate agent's fees, costs are typically fixed by regional governments. They vary somewhat across Germany, hence the ranges shown above.
Contracts are in German and signed in the presence of a notary. You should ensure you fully understand the contract before signing, and bring an interpreter with you if necessary. You have the right to have a translator with you, but you will have to supply (and pay) them yourself. In some areas, you may be able to find a notary who is bilingual.
As you will be arranging financing for the property at the same time as you are arranging the sale, it's important to include an exit clause in the sale agreement that gives you a way out if you can't arrange a mortgage.
Selling a property in Germany
It's important to consider how you will dispose of your property, particularly if you anticipate a sudden relocation. As most of the costs of the transaction are paid by the buyer, selling a property in Germany is relatively cheap. However, once the property is sold, you will have to pay capital gains tax of 25 percent if you have owned the property for less than 10 years. In addition, properties can be slow to move, unless you've managed to choose a particularly popular area, and this may tie up a significant amount of your capital. However, the rental market is strong and you are allowed to own property in Germany even if you are a non-national non-resident, so you may be able to continue to profit from your investment long after you leave the area.
Find a house in Germany using Expatica's housing search.
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3 Comments To This Article
Peter posted:
Can anyone tell me what documents I need to bring with me to buy a home in Germany? I'm from the USA and I will be flying to Germany within 2 or 3 months and I can't find an answer to this question. I would expect the Passport to be required maybe, but what else?
[Moderator's note: You can also post questions on Ask the Expert service]
James posted:
Paul posted:
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