Buying Real Estate in Germany

• The currency of Germany is the Euro (€) since the year 2002. Before then, the currency was known as the Deutsche Mark (DM).
• Here is a breakdown of the various commission and fee types involved with purchasing property in Germany:
  • Agent Commission: 2% - 5% + VAT (depends on the city)
  • Property Transfer Tax: 3% - 5% (obligatory, depending on each city)
  • Notarization: 1% - 1.5% (obligatory, depending on each city)
• Lawyer fees:
  • The fees associated with using a lawyer for legal translations or dealing with legal proceedings will of course vary with each case and each lawyer. Normally, a brokerage will have a network of multilingual lawyers for you to choose from.
  • Pricing example for lawyer fees:

• Purchase price up to €249,999
  • Lawyer’s fee: €2,000 + VAT
• Purchase price from €250,000 - €499,999
  • Lawyer’s fee: €3,500 + VAT
• Purchase price from €500,000 and up
  • Lawyer’s fee: €5,000 + VAT
•  Currently (2013) the VAT in Germany is 19%.

• A notarized purchase contract (“notariell beurkundeter Kaufvertrag”) is the only contract involved in purchasing real estate in Germany. Other necessary documentation would include the partition deed and the building specifications.

• As with many other brokerages around the world, Germans normally advertise their real estate by uploading properties to online real estate portals. Some of the top portals in Germany include:
  • www.immobilienscout24.de
  • www.immonet.de
  • www.immowelt.de
• As with other countries in Europe, there is no national MLS for Germany. An MLS, or multi- listing service, is a property listing service that allows brokers to establish contractual offers in cooperation with other brokers on property listings.

When a potential buyer asks for more information on any given property, a German property consultant usually approaches him or her per telephone or e-mail. The consultant will then ask the potential buyer about their purchasing budget, approximate size needs, desired location in the city, and if the property would be used as an investment or for self-use (family living, etc.).

The consultant will then match the needs of the client with the ideal property options on hand, and information such as exposés and brochures on the property is then sent to the client via e-mail. Brochures are normally in both English and German. The customer service of course will all depend on the quality of the agency. The best thing to do is to look for full-service multilingual agents with experience working with foreign buyers.

• According to the German Institute for Economic Research (IW) in 2012, Munich was Germany’s most expensive city for real estate, where a condo cost €4,200 per square meter on average. Hamburg and Frankfurt are close in tow, costing an average of € 3,100 and € 2,900 per square meters respectively. Berlin was relatively inexpensive, costing on average € 2,200 per square meter.
• The IW saw that the prices for apartments in Germany increased on average by 10.5% between 2003 and 2011, while the prices in the large urban centers increased much more. Take for example Hamburg and Berlin, where prices rose by 31% and 39% respectively within those eight years.
• The German real estate market is healthy despite the rapid increase in prices in Berlin and other cities. The higher costs are due to the new attractiveness of urban areas and a greater demand for German housing, both to Germans and international investors. The current record-low mortgage rates also boost the demand for purchasing property in Germany.

• The current prices in Berlin are around 1/3 of those in other European capitals, such as Paris, London, Rome or Oslo. When you compare the quality of both old and new properties in Berlin against the current price levels, Berlin’s real estate prices are still very much affordable. The price for Berlin, however, is increasing at a rapid pace.
• The current demand for real estate in Berlin is exceeding the supply, leading to the increasing prices while also resulting in a high capital appreciation potential, all with safe and stable returns.

• “Do I need a residency permit or visa if I intend on purchasing an apartment in Germany?”
  • You do not need to have a German visa or a German residency permit in order to buy property in Germany. However, you will need a valid passport to prove your nationality.
• “Will I need a lawyer?”
  • It is recommended to seek out a lawyer in the German city where you plan to buy to assist you with your questions, including those concerning property regulations in that city.
• "Are there mortgage options for foreigners living in Germany?"
  • Yes! In order for a foreign buyer to obtain a mortgage from a German bank, the buyer should have at least 40% - 50% of the value of the property in equity and proof of a stable income that will allow the buyer to pay for the loan installments. This is the case for purchasing an investment property. If you are purchasing a property for self-use, then German banks could offer a loan of up to 80% of the value of the property.

• What nationality buys the most property in Germany, aside from the Germans?
• Since Berlin’s property market is currently booming, the influx of international investors is increasing year by year. The majority nationalities of foreign real estate investors include: British, French, Greek, Spanish and Italian investors.
• Where in the world do Germans typically purchase the most real estate, aside from Germany?
• Germans tend to buy real estate in Spain, France and the United States.

Information courtesy of Berlin Capital Investments.