Property in Germany

Buying Property in Germany

As a stable country with a solid economy and government, Germany is a favorite for long-term international property investors. With its high rental rates, it is also a good location for those looking to invest in rental property. There are no restrictions on foreign purchases, but if you want to live here you need to have a residency visa. This can take a while and is certainly not a guarantee, so it is best to look into this prior to beginning to look for property.

Most property in Germany is pre-existing housing and is purchased through an agent or directly from the seller. The agent’s commission is not automatically paid by the seller, so make sure you know the terms up front when working with one. Also, when it comes time for the contract to be written, it is very important to specify who pays.

In general, you do not sign any paper or commitments until terms have been negotiated with the seller, usually verbally. Because most property is existing housing, it is important to perform all the necessary research prior to signing. Inspection of the property, research of rental contracts, outstanding payments, and inspection of any equipment that might need to be upgraded all must be done prior to signing the agreement.

After the financing is obtained and basic terms agreed to, a date is set for a notary signing. The notary in Germany is impartial and does not represent either side, although, as the buyer, it is a good idea for you to select the notary, or Notar in German. At this meeting the notary reads the contract for both parties to sign. If you would like changes, this is the time to insist upon them. Once this initial contract is signed, then you are committed to the deal. So, ask for as much as possible here. All parties must have their passports available at this signing.

After agreeing to the contract, both parties agree on a specified date to meet for the handover and payment. Prior to this date, all fees must be paid and the Notar takes care of the registration process. The Notar will make all applications in the Grundbach, or land registry. The agent’s commission is typically 3-5% plus VAT and the purchase tax is 3.5% of the purchase price. Notary and registration fees amount to about 2.5% of the price and must be paid prior to the final turnover. If you have a mortgage it needs to be registered with the Grundbach as well.

The process is a little bit more complicated in the former East Germany. This is because land registration and title are still open for interpretation and argument in much of the old east. Obtaining a clear title is more difficult and it is important to understand this and do all research prior to investing here