Comprehensive Guide to Buy a Property in Germany

If you plan to buy a property in Germany, here is a comprehensive guide for you. Different countries favor property purchasing, either buying them or renting them. In Germany, these options are well balanced. Whether you buy your home or rent it, you will still get the best from your investment. Less than 50% of the German population own their homes.

In this guide, you will discover some vital things you need to consider before buying a property in Germany. How and where to find a good deal, whether you should buy or rent a property, and other useful information will be shared. Keep reading.

Finding a Property in Germany

You can find properties to buy either from a real estate agent or directly from the owners. Whichever way you choose, you still need to find a property you are interested in before approaching a deal.

You may be quick to assume that real estate agents here are paid by a seller. No, it can be a different case in Germany. The agent fees here are usually between three and seven percent of ant purchasing price - always confirm who is to pay these fees. Estate agents can be found in national organizations. They are also on newspapers' ads and online property portals.

How Much Does Buying a Home Costs in Germany?

Certain costs come with buying any property in Germany. Let's briefly look into this.

A seller usually pays the real estate agent. However, if you choose to use a buyer's agent (or probably an agent decides to split the fee), you may still need to pay a fee.

In most cases, a buyer claiming the property needs to pay a total cost of about ten percent of the initial purchase price.

Below is the breakdown of this total cost:

• Registration fees : between 0,8 % and 1,2 % ;
• Property Transfer tax : between 3,5 % and 6,5 % ;
• Fees of estate agents (if shared) : between  1,5 % and 3 %. About 19 % of VAT will be added. 
• Notaries fees: Between 1,2 % and 1,5 %.

Property Transfer Tax/Real Estate Transfer Tax

This is referred to as Grunderwebsteur in Germany. If you purchase a home, payment of transfer tax is required of you. It is usually about 3,5 % of the purchase price, the figure may vary in different areas.  

Below are some of the current prices in some regions:

Schleswig-Holstein - 6,5 %.

 Berlin - 6 %.

Saarland - 5,5 %.

Hamburg - 4,5 %.

Bavaria and Saxony - 3,5 %.

Price is 5 % in other regions like : Thuringia, Baden-Wurttemberg, Rheinland-Pfalz, Hesse, Saxony-Anhalt, North Rhine-Westphalia, Brandenburg, and Mecklenburg-Pomerania.

Renting Vs Buying a Property in Germany ?

Is it better to buy a property in Germany or to rent it? Many have asked this vital question.

A quick look into the property market in Germany may help you make a smart decision. The prices of houses in Germany have increased following the recent financial crash. According to a German property consultant, 2017 witnessed up to a 20% increase in prices of properties in Berlin. Prices keep rising the following years. This means that real estate here is in the bubble phase. With this sequence in overpriced properties also comes the opportunity for buyers who don't have much money to invest in houses.

Prices of Houses in German Cities

According to the Global Property Guide, here is 2017 data for prices of houses (per square meter) in several German cities.

• Berlin -  It is €3,590 for an apartment. The price is €2,321 for a family home. 
• Hanover- An apartment costs €2,257. It is €2,000 for a family home. 
• Munich - The price for an apartment is €5,839, and a family home goes for €4,230.  
• Frankfurt - The price of an apartment in Frankfurt is around €3,170. A family home is about €2,500. 
• Hamburg - In Hamburg, an apartment is sold for €3,670. While a family home is around €2,530. 
• Cologne - An apartment here goes for €2,670. For a family home, the price is about €2,245.

The growth in prices of properties in Germany is due to different reasons. The number of houses available is not enough. According to a study, about 282,000 new houses were built annually in Germany. This is a low figure when compared to the demand. However, properties in Germany are reliable and stable investments for foreign and local investors.

Should I Rent a Property in Germany ?

More than 50 % of Germans live in rented homes. Renting properties here is very common, especially in the major German cities. For instance, the homeownership rate in Berlin is very low, at only 15%.

Recent data in 2017 reveals that the price of rents of properties in Germany increased by 7%. According to a study by the Global Property Guide, here are the average yields and rents on 120 square meter apartments in Berlin, Munich, and Frankfurt.

Berlin - Monthly rent in Berlin is €1,500. The yield is 3%.

Munich - Rent here is €2,250 per month. Yield is 2.9%.

Frankfurt - Rent is about €1,500 per month. Yield is 3.7%

Considerations to make Before Buying a Property in Germany

Pay attention to the following things if you plan to buy a property in Germany:

• Desired Location

This is key. Where your desired property is located is important. Location affects the value and price of the property you want to purchase. Beforehand, decide the kind of neighborhood you want to live in.

• Available Resources

This has to do with the financials. How much do you budget for an apartment within the location you choose? Also, put into planning the possible ongoing costs. Always work with your budget.

• What Type of Apartment Do You Need?

This should go in line with your budget. There are different types of apartments in Germany to choose from. The German buildings are classified into two - the Altbau (pre-1945) and the Neubau (post-1945). Altbau buildings are historical and classical. They define the very features of neighborhoods around Berlin. The Neubau buildings are more modern.

• Are There Options for Mortgage?

The German law doesn't restrict foreigners from either owning a house/property or having a mortgage from any bank in Germany. Obtaining a mortgage is easier in Germany than in other countries in Europe. The process remains the same as in other European countries.

• Vacancy Rate

This is also important. This indicates how desirable a building or area you are considering is. As high as the occupancy rate of Berlin is (which is roughly 97%), the vacancy rate here is very low. The same may be expected for other major German cities.

Conclusion

Buying a property in Germany is not that complicated. Whether you want to buy a home or rent it, you will always find a good deal if you put the factors listed above into consideration. You can also find here real estate listings in Berlin in English.