Berlin property, German property

Can a foreign citizen purchase German property?

Yes, all foreign nationals can acquire land and property in Germany, both directly in their individual name or in a company or partnership structure.

What are the transaction costs?

Transaction costs typically amount to 12-14% of the purchase price:

	transfer tax (stamp duty) 3.5% - 4.5% (depending on state; since 1 Jan 2007 it’s 4.5% in Berlin)
	agent fee 6% + VAT (agent fee structure varies state by state, in Berlin the fee is payable by the buyer, in some states it is split between buyer and seller)
	notary and land registry 1.5 - 2%
	Other associated cost – translations, mortgage (if required; approx. 1% arrangement fees)

What is the purchase process like?

Purchasing a Germany property is a straightforward process. After the purchase is agreed a contract is drawn up by the notary. A notary is impartial to the buyer and seller and is responsible for the tasks that, in the UK, are performed by a solicitor (title/land registry checks, preparing purchase contracts and ensuring fair contract conditions, etc). Both parties need to be present at the notary at contract signing or, alternatively, can be represented by another party with a power-of-attorney. Upon payment settlement the notary requests ownership changes at the land registry.

Are mortgages available?

Yes, mortgages are available for German property depending on the applicant’s financial status as well as the property. However, German banks have been extremely cautious in recent years, after having suffered heavy losses on property loans in the last decade. Obtaining a mortgage can, especially in case of foreigners, be a lengthy and bureaucratic process. Depending on property and applicant’s status, loans of up to 60-70% LTV are possible (in very rare cases up to 80%). German nationals can, in some cases, obtain a higher LTV. All applicants must provide last three years of tax returns, employment contract and pay slips, bank statements, proof of assets/liabilities, etc. While German banks tend to view self-employed applicants less favourably, mortgages are typically available provided all required documents are supplied.

What are the running costs?

This will depend on the provisions of the rental contract agreed with the tenant. For residential properties, all costs except property management, maintenance and repairs can generally be passed onto the tenant. Costs for property management are typically 25-35 euro per unit per month. Rental management is a separate service from property (house) management and can be provided by the same or another company (as house management). The fee for rental management is generally 25-30 euro per apartment per month. (In case of entire blocks only one management fee applies and usually covers both house and rental management services.)

What about taxation?

German tax law is among the most complex in the world. It is therefore a must for any investor to consult a German tax advisor and/or accountant, in order to determine the most tax efficient structure. In general, foreigners with no other German income but rental income on property will usually be subject to the lower tax rates (though this will depend on the size of investments - income is subject to a progressive tax).

For a brief overview please see the following link: German Tax Overview

Where to learn more?

About Germany and Berlin:

Mapping site, any street or postcode in Germany

Facts about Germany covering all aspects of life in the country

Official Berlin website including tourist info

Berlin tourist info site

Official Germany website

Federal government website

German central bank website

New BBI airport (german language)

Germany's official investor information site