Buy real estate in Germany: prices, taxes, citizenship

Investing in the purchase of real estate with a competent approach can become a very profitable idea. This will allow you to get a stable income and reliable insurance for the future. And this is one of the reasons in favor of buying real estate in Germany – one of the safest countries in the world.

Can buy real estate in Germany?

According to current German law, there are no restrictions on the purchase of real estate by foreigners, including non-EU citizens. Accordingly, can safely buy houses, apartments or plots of land for further construction.

What is interesting is the possibility of a mortgage. The main confirmation of the timely return of the amount received is a stable income coming to an account in a local bank, as well as an official employment contract with a German company. But you won’t have to count on significant loyalty of interest rates: the conditions are not too favorable for foreign citizens. The final percentage will be announced after the application is submitted.

Can you get citizenship by buying real estate in Germany?

Buying real estate, regardless of its value, does not provide grounds for obtaining a residence permit, let alone citizenship.

Why it is profitable to buy real estate in Germany

Buying houses and apartments in German spaces is always attractive for foreign investors. And this is due to a number of reasons:

• The relevance of rented housing. Real estate in Germany is constantly in demand. For many families, renting is much better than buying, which allows you to change your place of residence and move to another city at any time: for a profitable job or new prospects.
• Economic stability. A minimal level of inflation, comfortable living conditions, a decent level of wages and social security – the combination of these factors affects the solvency of the population. The real estate market is stable, and the constant influx of citizens from other countries ensures stable demand.
• Security. A leading democratic country with a transparent legislative framework, strict compliance with laws, effective law enforcement agencies is an excellent choice for both temporary and permanent residence.

The long-term outlook is quite rosy: residential and commercial property prices will only increase in the future, as will rental yields in the future.

Buying an apartment in Germany as a profitable investment

To assess the profitability of a specific object, you need to perform basic calculations that look like this:

• apartment price: 250,000 euros;
• fee for realtor services and conclusion of the agreement: 5,000 euros;
• annual real estate tax: 1,000 euros;
• real estate insurance: 500 euros per year;
• repair and maintenance costs: EUR 1,000 per year;
• rent – 1000 euros per month.

Accordingly, annual income is 12,000 euros, expenses are 2,500 (insurance, maintenance, tax), net profit is 9,500 euros.

If you evaluate the profitability in relation to the costs of purchasing a real estate object:

(9500/250000) * 100 = 3,8%.

All calculations are approximate: the cost of real estate in Germany depends on the land and the settlement in which it is located, the architectural features of the building, the area of ​​the premises and other factors. But the basic formulas will help to calculate the approximate profitability to assess the future prospects.

Can a foreigner buy land in Germany?

There are no restrictions, including for those who are not citizens of the country. But it should be taken into account: building a house is quite an expensive event that requires obtaining a number of permits from various state authorities. And taking into account the German bureaucracy, this procedure can drag on for a very long time.

It is much more profitable to use the purchased land for agricultural work: special conditions and benefits are provided for farmers, and eco-products are always in demand by the population.

Real estate prices in Germany

The cost of apartments and houses directly depends on the land. Therefore, the average price in Berlin is at the level of 4150 euros/m2, and in the former territories of the GDR you can buy housing much cheaper. In Dortmund (North Rhine-Westphalia) you can buy real estate at a price of 1,700 euros/m2. But in Munich, you will have to pay about 8,300 euros/m2 for housing. Average prices per m2 by city:

• Dusseldorf – 4,000 euros;
• Frankfurt – 5,000 euros;
• Hamburg – 5,000 euros;
• Cologne – 3,500 euros;
• Leipzig – 2,500 euros.

In search of a suitable object, it is necessary to study the real estate sites in Germany and analyze the available offers. To save money, you should not choose big cities: near any of them there are dozens of small settlements located within a radius of 10-50 km. An apartment in them will be much cheaper, and the presence of the autobahn will allow you to quickly reach the capital of the chosen land. There is always an alternative – trains, for frequent trips on which you can buy a special travel ticket.

What affects the cost?

In addition to the characteristics of the land and the location of the settlement, the price of housing is influenced by other factors:

• area;
• proximity to the center;
• distance from supermarkets and pharmacies;
• availability of children’s educational institutions within walking distance.

There are also additional factors, such as the number of floors of the building, parking, special advantages and conditions for residents.

The procedure for buying real estate in Germany

The process is almost identical to buying an apartment, but with some nuances. The procedure for the buyer is as follows:

• choose a current offer (which is convenient to do online);
• submit an application;
• discuss all conditions;
• check the owner’s rights to the property and the presence of encumbrances in the Grundbuch – land register;
• sign a contract;
• transfer the stipulated amount to the previous owner;
• register rights to real estate.

You can find suitable options on specialized sites, but it is better to contact a large real estate agency, whose employees will provide full support for the deal. Those who do not speak German will additionally have to invite a translator to the transaction, whose services must also be included in the list of future expenses.

Is it possible to draw up an agreement without realtors?

In theory, the procedure for buying real estate in Germany does not cause any particular difficulties, but in practice “pitfalls” may arise. Moreover, most owners refuse to cooperate directly, especially with foreigners – so it is often easier and cheaper to contact a realtor than to try to solve all the issues yourself.

The cost of services (commission) of realtors in Germany

There is no fixed rate – it is variable and ranges from 4 to 7%. It all depends on the land, the specifics of the deal and other factors. But there is a plus: in 2020, a law was passed that provides for the equal participation of the buyer and the seller in paying for real estate services – therefore, the final commission will be divided in half.

Taxes when buying real estate in Europe

When signing a contract and concluding an agreement, you cannot do without a notary, whose services are approximately 2%. A month after the transfer of the property to the new owner, he will have to pay a tax fee of 3-6% of the real estate value.

The registration fee for entering data into the land cadastre is 1%.

What else do you need to know when buying real estate in Germany?

Before you start looking for an object, you need to take into account several important details that are relevant for buyers of houses and apartments in German states:

• The owner is obliged to promptly resolve any issues related to the maintenance or repair of utility networks. He must also take care of the surrounding area, otherwise he can receive a fine.
• A common problem is mold. It can occur with insufficient ventilation and easily transfer to neighboring apartments. Therefore, when renting, it is important to fix a point in the contract: all windows must be open for at least 5-10 minutes a day – otherwise the fault will lie with the owner of the object, as well as the costs of mold removal.
• The seller of real estate is obliged by law to tell about all hidden defects. But there is a nuance – only about those that are invisible during the inspection. But no one is obliged to talk about visible flaws, so it is worth carefully inspecting each room and utility room.
• It is often forbidden to make changes to the design of the facade, including the installation of non-standard double-glazed windows. In many countries there is a rule: houses on the same street must correspond to a single concept.
• Spacious rooms are more often a minus than a plus, because considerable sums are spent on heating in the winter.

But the main thing: prices for real estate in Germany vary significantly. And in search of better offers, potential buyers turn to several realtors at once. As soon as one of them offers a suitable option, you must immediately refuse other offers. Otherwise, if an offer comes from another agent and a decision is made to buy it, you may face a requirement to pay double commissions. And it is very problematic to refuse it, so it is easier to work with a specific agency, avoiding useless risks.