When you’ve chosen the mortgage product that works best for you, you’ll need to make your application. Typically this will mean that you have to arrange a stack of paperwork, and visit the If you’re considering buying a property in Germany, you’ll have a choice of life in a large metropolitan city, a stately historic town or a more rural setting entirely. If you’re planning on a move to Germany, you might be thinking of joining the 3.6 million inhabitants living in Germany’s capital Berlin, dreaming of historic Hamburg or maybe even planning on Munich, the German city with the highest quality of life.
Of course, city life might not be your thing. Luckily, there’s a huge choice of smaller towns, many of which have excellent transport and commuter links to the large cities. Residents get the best of all worlds, with easy access to the facilities of the city, the community feel of living in a smaller town and the peace of the surrounding German countryside.
There are relatively low homeownership rates in Germany, with just over half the population preferring to buy rather than rent. However, historically low interest rates mean that more and more Germans have now decided that this is the right time to invest in a property. If you’re thinking of doing the same, then you’ll need to know a bit about how the process of buying a home in Germany as an expat will work. Here’s a quick guide.
In 2014, only around 52% of Germans owned their own homes, with the rest preferring to rent. Home ownership in Europe runs at nearly 70%, giving Germany one of the lowest figures in the EU. However, this has started to shift significantly over recent years. Historically low interest rates have caused more people to opt to buy a house, rather than watch their savings eroded by inflation.
Germany was also relatively unaffected by the housing crash which hit most of Europe and North America in the late 2000s. Because of that, property here has been seen as a stable investment for overseas investors for some time.
The sharp jump in people choosing to buy property has pushed prices up. In 2015, house prices were up 5.8% and in 2016, they shot up again by a further 8%. 2017 shows no sign of being any different, prompting heated debate about how sustainable the level of increases are.
House price rises are affected by local market forces, such as the availability of housing stock, and changes in the demographics. This means that the steep increases haven’t been across the board in Germany. In the first half of 2016, for example, prices actually fell in Dortmund by 3%, and the cities of Dresden and Hamburg saw only modest increases of under 2%. On the other hand, the southern German cities of Munich and Stuttgart experienced price increases of around 10% year on year.
Where house prices are rising, often so are rents. Again, in some places this is a hot political issue. Renting in Berlin, in particular, has come under intense scrutiny recently, as steep rises in rental costs have made it difficult for people to afford their homes.
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There are no special requirements nor paperwork for foreigners wishing to buy property in Germany, so you shouldn’t have any issues.
If you’re thinking of buying a property in Germany, the price you pay will be influenced significantly by where you want to live. As this table shows, location really matters, with a reasonably large Munich flat costing some €400,000 more than the same property in Frankfurt.
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There are several avenues you can take to find a property in Germany:
- Through an agent (immobilienhändler or makler)
- Through an online portal which puts owners directly in touch with prospective tenants
- Through word of mouth.
An estate agent, if used, generally works on behalf of the seller. However, as the prospective buyer, you can also choose to use a buying agent to help you. The estate agent fees are likely to be between 1.5 and 3% of the price of the property. These are usually paid by the seller, or split between the buyer and the seller.
If it’s the first time you’ve bought a property in Germany, then a specialist agent might offer helpful advice and insight into the local market. However, there will be a fee to pay for this service, and you should make sure you’re clear on what you’ll get for your money, as both the packages and prices vary wildly.
Ask for local advice and recommendations for a broker, to avoid scams and pitfalls. Looking for membership of a professional body is another good choice. The IVD is an association of German realtors, which has over 6,000 direct members. Choosing an agent who holds this membership should make sure you don’t fall foul of any scammers.
The best way to get a head start on finding a place to buy in Germany is to look online. Great websites to find a house or apartment to buy include:
- Hypofriend - This German startup helps expats at every stage of the home buying process and partners with 400+ lenders to help find a matching mortgage offer.
- Immobilien Scout - Offers a wide range of housing options.
- Wohnungsboerse - Puts you into direct contact with landlords, so there aren’t any agent fees. However, this will mean that you have to do your own research to make sure the place is suitable.
Germany has a well developed real estate sector. This means you'll have a wide choice of apartments, houses or even land if you want to build your dream home yourself. Naturally, you'll find more flats available in built up areas and cities, with houses and villas more readily available in newer developments in the suburbs, and in towns and villages. The recent rise in house prices has fuelled much new building, and you'll find a good mix of older properties and new build condos in the cities.
It’s a smart idea, though not required by law, to get a survey done on any property you choose, before you commit to buying it. Older houses in particular can have hidden problems which are costly to fix. Find a registered surveyor online, or ask for recommendations from local connections to double check the property.
It’s worth knowing that buying a place that’s currently occupied can be problematic as it can be very difficult to force the sitting tenants to move on without a full eviction process. Be wary if this is the case for your chosen property.
Buying a property in Germany isn't too dissimilar to buying a home elsewhere in Europe or North America. You’ll need to:
- Decide which mortgages might suit you, and get an offer in principle so you have a budget in mind
- Find the property you want to buy
- Make an offer the seller agrees to
- Get a notary (notar) to draw up the sale contract
- Go back to the bank and finalise the mortgage
- Sign the contract, and have the notary register the sale
- Within a month, you then have to pay the property sale tax (3.5–6.5% of the purchase price)
The notary has an extremely important role in house sales in Germany. He’ll check the land register to make sure the property can be legally sold and check for any restrictions on its use. There will then be a signing meeting in which the notary is obliged to read out the contract in front of all concerned parties and check understanding before anyone signs. Naturally, this is all carried out in German, so it’s probably worth paying for an official translator to be present if you need help.
You can choose whichever notary you’d like to manage your property purchase, so find someone you trust and who speaks English if your German isn’t up to scratch.
In most cases, to buy a home in Germany you’ll have to take a mortgage through a German bank. There’s no legal barrier to getting a mortgage with a bank from another country (within Europe, at least), but individual banks usually decline such applications. This is because there are checks the lender must do on both the property and the borrower, which typically have to be arranged locally. Thus making cross border mortgage lending fairly unusual.
However, Germany has a developed banking sector and you have a good choice of local and global banking brands to choose from when it comes to arranging a mortgage ( hypothek ). The four largest banks in Germany are Deutsche Bank, Commerzbank, Postbank and Hypovereinsbank. All offer mortgage products, although it’s worth checking the small print as each product will differ slightly from the next.
You don’t legally need to be a resident to open a German bank account and arrange a mortgage. However, if you’re not an official resident you might find that you’re only offered a relatively low mortgage amount (in the region of 60% of the property price). This will mean that you may need to pay up to 40% of the purchase price upfront as a deposit, which is a hefty amount.
bank in person to get approval. Each bank will operate slightly differently, so call your local branch to check if you need to make an appointment in advance. You should also check if there’s an English speaking staff member who can help you, as this isn't always the case.
It’s worth getting a mortgage agreement in principle before you go on too far with your property search, as this will give you a more solid idea of what you can afford.
Once you’ve found the right home for you, you’ll have to hand over details of the property such as a property assessment and proof of current ownership from the Land Register. You’ll also have to prove your ability to service the mortgage, by showing your payslips or evidence of your net worth.
The amount of deposit you’re asked for will vary depending on the mortgage deal you choose. It’s normal to pay at least 20% up front, but some expats are asked to pay more (up to 40%) because they’re considered to be more risky than local buyers. What matters most is whether or not you’re an official resident of Germany, as banks tend to offer larger mortgages to those who have resident status.
If you’re not yet in Germany, you might have to pay your deposit from abroad. It can be hard to open a German bank account without actually being in the country, so this might mean making an international money transfer to cover the deposit amount. If you’re transferring a large amount of money across currencies, it’s important you get the best deal available.
One smart option is to send money online with Wise. You'll cut on the fees charged by the banks, avoiding hidden mark-ups and Swift fees from intermediary banks.
Another idea is to get a free Multi-currency account with Wise. With this, you can hold 15 different currencies all in one account (including GBP, USD and EUR). It’s like having a local bank account which you can use to pay like a local, wherever you need it. And if you need to, you only pay a small flat charge to transfer cash from one currency to another, and gives you the real exchange rate - the one you find on Google.
Once you add up all of the fees you’ll have to pay as a buyer, you can expect to add around 10% of the property price onto your bill. Fees and taxes include:
- Property sale tax ( Grunderwerbsteuer ): In the region of 3.5–6.5%
- Notary fees: Usually 1.2–1.5% depending on the circumstance
- Registration fees: Normally 0.8–1.2%
- Estate agents fees: If you agree to share these with the seller, you’ll need to pay these. Typically they’ll be 1.5 - 3% (but can go up to a huge 6%) of the purchase price, plus VAT at 19 percent
Buying a property is a big - and exciting - step, but navigating the system in a new country can be a challenge. Luckily, buying your dream home in Germany should be fairly straight forward if you follow these steps, and find the right local help if you need it.
Good luck with finding, buying and settling into your new home in Germany.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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