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Guide to buying property in Germany as an expat

Home to some of Europe’s liveliest cities and many incredible lakes, woodlands, and mountains, it’s no surprise that moving to Germany is a dream for many. From Bavarian cabins to spacious city-centre flats, you’ll find a huge range of homes just waiting for you to view.

While not necessarily the first country in Europe you think of when deciding to move abroad, Germany might not be a sunny hotspot like Spain and Portugal, but it more than makes up for that with its deep cultural roots and history.

Germany also has the advantage of bordering 9 European countries, meaning that if you want a European holiday, you just as easily go skiing in the Alps as you can visit the Nordic fjords.

So, if Germany is top of the list for where you plan to move to, then having an understanding of how the German property market works is essential to make buying a house in Germany simple and easy.

We’ve collected what you need to know about buying property in Germany as a foreigner, including legal requirements you need to be aware of and common pitfalls to avoid so that you can move to Germany as soon as possible.

Can foreigners buy property in Germany?

This might be the first question on your mind when considering buying property in Germany. Fortunately, the answer is simple: There are no restrictions!

It doesn’t matter if you’re an EU resident or from the other side of the globe, if you want to buy property in Germany, there is nothing to stop you besides traditional credit checks.

The current German housing market

Germany has a reputation for being an incredibly stable market, and this is still the case. Despite the recent pandemic, German markets weren’t hit as hard as those of other countries, and that includes the housing market.

But unlike much of Europe, the main nuance to the German housing market is that renting tends to be the favoured option for German residents.

Less than half of all German citizens own their own property thanks to a variety of consumer-friendly renting laws, making them the second-lowest rate of homeownership after Switzerland.

That being said, property in Germany currently sits in high demand but is low in availability. Prices are high, especially in the most popular cities, and there are concerns that a housing bubble may be forming.

However, you shouldn’t let this put you off. If you’re willing to explore your options and take your time, you’ll have no trouble finding a property both within your budget and in your ideal location.

In terms of current prices, for the major German cities, you’re looking at the following costs per square metre:

  • Munich – €5,839 for a flat or €8,877 for a home
  • Hamburg – €3,669 for a flat or €5,475 for a home
  • Berlin – €3,593 for a flat or €4,856 for a home
  • Frankfurt – €3,167 for a flat or €5,605 for a home

Given the price of property in Germany, the market tends to favour those looking to live in Germany for a long period of time. Doing so will definitely make getting a mortgage in Germany simpler, the specifics of which you can read about in our article on getting a German mortgage.

The initial steps for buying a house in Germany

The key thing to know when buying property in German is that you should prepare yourself well in advance. It’s recommended that you take a year or more to find the property you want, giving you time to check out all your options and find the best deal.

When buying property in Germany, the following steps are how it’s suggested you approach your property search:

  1. Assess your finances and research what area of Germany you want to buy in.
  2. Use online portals or get in touch with local estate agents to begin your property search.
  3. Begin the mortgage process to get an offer in principle.
  4. Decide on a house and make an offer.
  5. Work with a notary to draw up a sale contract.
  6. Finalise your mortgage and sign the deed of sale.
  7. Wait for the notary to register the deed on the land registry.
  8. Pay any remaining costs.

When it comes to your property options in Germany, private property sales are available, but if you want the best housing options, then you should make use of German estate agents and online portals that are expat-friendly.

The most popular online portals include:

  • immobilienscout24
  • immobilo

If you decide to get in touch with an estate agent in your chosen area directly then you’ll want to employ the assistance of a translator, such as those recommended by the international mortgage brokers we work with at Blacktower.

You also want to be sure that the estate agent you’re hiring is fully qualified. The restrictions on what qualifies you to be an estate agent in Germany are less rigorous than in other countries, but you can be sure yours is qualified by checking they’re registered in the IVD, Germany’s national organisation for estate agents.

Once this is sorted, it’s on you to go out there and view the properties you like. It’s advisable that you conduct viewings with a second person as two sets of eyes are always better than one, and to take your time with the viewing so you can see everything.

Nuances to know about when buying a house in Germany

As with buying a home in any country, there are a few important things to know about when you buy property in Germany specifically.

First and foremost, while all housing in Germany has to meet certain legal requirements when it comes to their windows, roofs, heating, and other utilities, a survey of the property is not required as part of the buying process.

That being said, it’s highly recommended that you do employ someone to conduct a full structural survey to ensure any potential home defects are spotted before you complete the sale process.

You should also expect to pay a substantial deposit if you buy a house in Germany, often being a minimum of 20% of the property value, though it could be as high as 40% as an expat.

This high deposit level is related to how German mortgages work and is treated as a combination of accounting for risk and helping to show that you’re serious about buying.

Lastly, one key advantage of the German property market is that, due to the high percentage of renters, house turnover is low, giving you plenty of time to browse your options and find that perfect property.

Completing the property purchasing process

Once you’ve settled on a house to buy, the next step is to agree to a price with the seller and make an offer. You can then approach a local notary, who is legally required to draw up a contract of sale. This is another area in the process where making use of a translator’s services will be invaluable.

With this contract ready, you can sign the sale contract, this can then be followed up with the signing of the deed of sale once you’ve finalised your mortgage. However, you should know that simply signing this contract does not mean the property has been transferred to you.

For you to become the proud owner of your new home, two things must occur. First, the notary must register this sale as taking place and perform some required government checks to ensure there’s no reason as to why the sale can’t go ahead. On top of this, you’ll be required to pay what’s called a property transfer tax.

A notary is required for these last stages and will act as an impartial middleman to check records and keep paperwork in order. You should be sure that your chosen notary is bilingual, or that you have a translator on hand to help you through the signing process.

You want to be sure you fully understand any contracts you’re signing so that you’re not paying unnecessary extras, and the addition of an exit clause is a good solution if you’re concerned your mortgage might not be forthcoming.

Finally, if need be, you can employ legal representation to represent you during the signing process if you’re unable to make the signing for whatever reason. Naturally, once you’ve signed the contract, its contents become legally binding.

Costs to be aware of when you buy a house in Germany

As with purchasing any property, there are extra costs associated with buying property in Germany.

As mentioned previously, you will need to pay a property transfer tax, which usually sits at roughly 3.5-6.5% of the property value, based on the region of Germany you’re buying in.

On top of this tax, you will have to pay the following costs throughout the buying process:

  • Notary fees – 1.2-1.5%
  • Registration fees – 0.8-1.2%
  • Estate agent fees – 1.5-3% with an added 19% VAT

With this knowledge to hand, you should find the process of buying a house in Germany to be relatively simple. Of course, if you’d like even more information about moving to Germany or elsewhere in the world, you can visit our locations page.

You can find a range of information relating to moving abroad as an expat throughout the Blacktower site, including details on international mortgage solutions, free guides, and further information on the Blacktower blog.

This communication is for informational purposes only, based on our understanding of current legislation and practices which is subject to change and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Getting a Mortgage in Germany as an Expat

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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