Purchase a Property in Germany - Guidelines for Buyers
Purchase a Property in GermanyUpdated on Tuesday 05th December 2023
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|Homeownership in Germany
|49,5 % (2021)
German property market
|Stable, attractive to investors, with a high demand for rental properties
Real estate agents, websites, property auctions, newspaper/online ads
|Residence permit required (YES/NO)
19% (business and sole traders must also apply for VAT Registration Germany for purchasing property)
|Fees and taxes
Property transfer tax (Grunderwerbsteuer): 3.5% - 6.5% of the purchase price;
Passport or ID;
Non-residents may need to pay a larger deposit;
Many buyers in Germany will need to pay a downpayment, with 20% being a common amount; Non-residents may need to pay a larger deposit.
|Can obtain a resident visa (YES/NO)
|Personal loans allowed (YES/NO)
YES (but not recommended)
|Average house prices for single-family and duplex homes (approx.)
5,000 -11,000 EUR per square meter (2022)
|Buying a property in Germany with existing tenants
German rental law protects tenants from sudden rental price hikes and eviction;
|Advantages of purchasing a property in Germany
Stable real estate market;
|Assistance for purchasing a property in Germany (YES/NO)
|YES, we offer assistance with property registration and legal matters regarding real estate in Germany
Finding a property to purchase in Germany
The first step when wanting to acquire real estate in Germany is to search for the suitable property. Real estate properties are subject to some minimum legal requirements and a law firm in Germany can provide you the details about these requirements. Some of them refer to the roofing, windows and heating system, which is why a thorough real estate due diligence is required.
Property encumbrances or third party leases can be checked with the German Land Registry. The real estate due diligence at the Land Register is usually performed by a public notary, but for building verifications an architect is recommended.
- Ownership: you will find out the ownership history, and when the first original title deed was issued;
- Legal issues: any new home owner wishes to make sure that there are no legal impediments on the purchase; in this case, the encumbrances can have a legal or a financial nature; for example, after the verification you will find out if the property is or has been the object of a legal dispute; the due diligence will also reveal any tenant/leasing agreements that were concluded for the property; you will want any such agreements to have ceased at the time of the purchase;
- Price: the due diligence will also serve as a basis for the property valuation; once any issues with the property are identified, you will be informed if the asking price is the correct one;
- Construction issues: the verification will also reveal if the property is not observing any relevant construction rules, energy efficiency rules, and others; in special cases, such as for houses that are considered historic or heritage buildings, you will find out more about the rules and regulations you will need to observe for their restoration.
The sale-purchase contract when buying real estate Germany
Once all the verifications are done and the new owner and seller agree on the price, terms and conditions of concluding the transfer of property, a public notary will draft the purchase agreement. The notary will make sure all documents are correct and the contract will be signed in his or her presence. The contract will contain the obligations both seller and buyer have and the measures to be taken if any of those obligations are breached.
Parties have the right to choose the way the payment for the German property is made, respectively received. However, the buyer must know that until the property is not registered with the Land Register he or she will not own the purchased real estate. The Land Register is located within the German district court where the property was bought.
We are also at your service if you have inherited a property but need to contest a will in Germany in order to become its sole owner.
Transaction costs when buying real estate in Germany
There are several costs attached to the purchase of property in Germany. These include the following:
- The property transfer tax between 3.5% and 6.5% depending on the region the property is located in; usually, this is payable within four weeks after making the purchase;
- The notary fees can be approximately 2% of the property value; these can depend on the chosen notary, and we advise clients to keep in mins that these vary;
- Buyers can also expect a registration fee, which depends on the registry with which this is made (however, an expected value can be around 1% of the property value);
- The real estate agent’s fees should also be taken into account; these vary according to region, however, buyers can expect to pay prices around 3% of the property value; these are commonly shared between the buyer and the seller;
- The new owner must also consider the 19% VAT rate.
Can foreigners buy real estate in Germany?
Mortgages in Germany
Purchasing a property in Germany with sitting tenants
The real estate market in Germany
- Residential property prices decreased by 9.9% in 2023 on a year-on-year basis; this is the most significant decrease since the start of the data collection in 2000;
- Property prices decreased by 1.5% on a quarter basis, and the price drops were more significant in large cities, such as Berlin, or Munich;
- Even given these changes, the German real estate market remains an important one given its size and investments in residential construction have amounted to almost 7 billion euros between the months of December 2022 and November 2023.
Our lawyers in Germany can provide you with information about the best regions to purchase properties in. You can also contact us for details about property registration with the German Land Register.