GERMANY

Buying property in Berlin

Germany is a popular choice for working British expats. According to official figures, there are around 168,000 British citizens living in the country, the majority of whom have a professional qualification. The country has a lower cost of living than the UK, and a fall in property prices over the past couple of years has made property more affordable (although the bureaucratic approach may slow things down).

But Germany has more to offer than attractive data points. Its cities are rich with culture – Berlin has a vibrant music scene while Cologne’s famous cathedral, which took seven centuries to build, is the country’s most visited attraction.

And if you need some time away from the bright lights, there is plenty to explore. The Black Forest is a hiker’s paradise and visited by 2.2 million overseas tourists a year. And to the north, the Baltic Sea beaches offer miles of coastline, although there may not be many opportunities for sunbathing.

Germany’s property market differs from some of its European neighbours, as many residents choose to rent a home rather than buy one. The good news is that there are no restrictions on expats buying German property – you’ll just need a high enough income and be able to qualify for a mortgage.

Homeownership in Germany
Germany has one of the lowest homeownership rates in Europe. Just 50% of residents own their own property, compared to the European Union average of 70%. Germany has long had a unique relationship with property ownership. A 2020 report by the German Federal Bank (Bundesbank) found that the country’s low homeownership rate was primary down to three factors: the high additional costs of buying a property, mortgage interest payments not being tax deductible, and the country’s strong social housing sector.

The German property market is robust, with an imbalance of supply and demand in cities resulting in significant increases in housing prices over the last decade. Low interest rates have also made it easier than before for residents to get accepted for a mortgage.

Should you buy or rent a house in Germany?
Renting in Germany is very common, with many residents opting to rent properties for the long term instead of buying a home. Purchasing a small property and progressing up the property ladder isn’t the “done” thing in Germany. Buyers instead purchase homes to live in for a long time. Renting can be prudent when you first move to the country. This way, you’ll give yourself time to assess your options, find an area you like and carefully consider whether buying is right for you.

Germany’s rental market can be competitive, especially in major cities where renting is the main form of tenure. In Berlin, for example, around 85% of people rent their home. To rent a property, you’ll need proof of identification, your credit report and evidence of your income. If you’ve previously lived in Germany, you may be required to present a certificate from your landlord confirming you have paid any outstanding rent. Tenants without steady incomes may need a relative or friend to act as a guarantor. It’s not uncommon for minimum tenancy periods in Germany to be at least two years. Some tenancies run for an indefinite period, with clauses allowing the landlord or tenant to serve notice to end the agreement.

Can expats buy a house in Germany?
There are no restrictions on expats buying property in Germany, regardless of whether you’re from an EU or non-EU country.

If you live and work in Germany, you should be able to get a mortgage from a German bank with no additional requirements. If you’re buying from outside of Germany as a non-resident, however, you are likely to need a much bigger deposit.

The German property market and property prices
House prices in Germany vary depending on where in the country you’re looking and the type of property you wish to buy. German house prices have soared during the last decade. Research by the EU commission found that prices increased by 94% between 2010 and 2022, compared to an EU average of 45%.

There have been short-term rises, too. Data from the German Federal Statistics Office (Destatis) found prices increased by more than 10% year-on-year for four consecutive quarters between 2021 and 2022. However, there have been some suggestions of an imminent slowdown. A survey of housing analysts by Reuters in May 2022 resulted in predictions of a 7% rise in 2022, a 3% rise in 2023, and a 2% rise in 2024.

Properties in some German cities tend to be cheaper than in other European countries. Most city properties are apartments, with houses more commonly available in suburban areas. Broadly speaking, rural areas tend to be cheaper than cities.

Research by the property portal Immowelt found that houses in Germany averaged €2,800 per square meter in early 2022, while flats cost €3,200. Saxony was the most affordable place to buy, while Munich was the most expensive.

Buying a house in Berlin

If you’re thinking of buying a home in Berlin or one of its suburbs, you might find you have a limited number of options. Due to the city’s high tenant population, you’re more likely to see properties available to rent rather than buy. Prices in Berlin are higher than the German average but cheaper than cities such as Munich and Frankfurt.

There is a range of housing types in Berlin. In the city centre, you’ll find converted townhouses and older apartment blocks to modern high-rise buildings. If you’re looking for a family home, suburbs such as Zeuthen (south of Berlin’s city centre) is a popular and more affordable area. To the north of the city, Hohen Neuendorf is a good option for greater peace and quiet.

Buying a house in Munich

Munich is the most expensive city to buy a home in Germany. As well as high house prices, the city has a high overall cost of living. In the ECA’s annual Cost of Living report, Munich ranked as the 16th most expensive European city for expats. These high costs are balanced, however, by the excellent quality of life offered by the Bavarian capital. As with Berlin, apartments make up much of Munich’s housing stock in the city centre, with larger homes more common in the suburbs.

Costs of buying a house in Germany
There is a range of fees you’ll need to be aware of before buying a home in Germany. Overall, these can add up to around 10% of the property’s purchase price, and in some cases, even more.

Property transfer tax (Grunderwerbsteuer)

Property transfer tax is the highest additional cost of buying a home in Germany. You’ll usually need to pay between 3.5% and 6.5% of the purchase price.

The exact rate will vary depending on which state you live in. Hypofriend provides a list of the latest rates. In Berlin, you pay 6%, and in Munich, 3.5%. Brandenburg, Saarland, Sleswig-Holstein, and Thüringen have a rate of 6.5%, the highest in the country.

You must pay property transfer tax within four weeks of finalizing your purchase. Once you’ve paid this tax, the transfer of ownership of the property can be registered in the German land registry (Grundbuch). If you’re having difficulty with taxes, it’s worth contacting a professional or using an online platform to simplify the taxation process, such as Taxfix or Wundertax.

Notary and land registration

The notary plays an important role in the German home-buying system. Fees are set by law and vary depending on the property value. You can expect to pay around 1.5%–2% of the property’s purchase price. This includes the cost of registering the property with the land registry.

Estate agent fees

Homebuyers in Germany usually split the estate agent (Immobilienmakler) fees with the seller, under a law introduced in 2020. Estate agent fees vary significantly depending on the state, the value of the property and the specifics of the estate agent’s contract. Fees can be as high as 6% plus VAT – totalling 7.14%, or 3.57% each for the seller and the buyer.

Financing a property purchase in Germany

To buy a house in Germany, you’ll usually need to take out a mortgage (hypothek). You don’t need to be a German resident to get a mortgage, but if you don’t have resident status, you might need a bigger deposit. German banks that offer mortgages include:

Commerzbank
Deutsche Bank
DKB
Postbank
Santander
Hypovereinsbank

We can assist with the financing via our independent finance team; they will advise on the best rates for you rather than what's best for the banks if you went direct.

Once you’ve found a property, you’ll make an offer through the estate agent. If the offer is accepted, you will be asked for a reservation fee (0.5% to 1% of the property’s price). When you pay this, the property will be taken off the market. The reservation period lasts two or four weeks, giving you time to finalise your mortgage. If you decide not to buy the property, you may lose the reservation fee.

If you want to get an independent property survey to check for any problems with the building, you should do this before signing the contract to buy the home. The Royal Institute of Chartered Surveyors (RICS) provides a list of surveyors in Germany.

Finalising your mortgage

Now is the time to finalise the specifics of your mortgage (e.g., how long you will fix your rate for). This can either be done directly with your chosen bank or via an independent mortgage broker if you’ve appointed one. Either way, you’ll need to obtain a series of documents from the seller confirming the property’s details, as well as evidence from your side confirming your identification and income.

Once you’ve submitted your application, allow the mortgage lender up to 10 days to process it. This can progress more quickly, but delays are possible if the lender needs to ask for extra information or conduct their own property valuation.

Signing the contracts

You and the seller will agree on a notary to progress the legal elements of the transaction. The notary will draft the final purchase contract. Once you’ve received this, there is a 14-day cooling-off period before it can be signed. You’ll then attend the notary’s office in person with the seller. If you don’t speak German, you will require a translator to come to this meeting with you.

The notary will read the contract, and both sides can ask questions and suggest edits. Once finalised, the notary will provide a priority notice to the land registry, registering an intention for the property to be transferred into your name.

Paying fees and transferring money

Once the transaction has been notarised, you’ll need to pay some of the fees listed above. The estate agent’s fee will likely come first, followed by the notary’s fee. Some weeks later (the exact time frame varies), the notary will set a date for you to transfer the full purchase amount to the seller. You’ll transfer the money to cover your down payment, and the mortgage lender will transfer the remainder. You’ll then receive the keys to the property.

Final arrangements

You won’t officially own the property until the land registry transfer is complete, which can be some weeks after you get the keys and move in. By now, you should have received your transfer tax bill, which must be paid within four weeks.

Moving into your German property
Insurance

If you’re buying a house in Germany, you’ll usually need buildings insurance (wohngebaudeversicherung) to cover the cost of any damage to the structure of the property – for example, due to fire or flooding. People buying apartments may not need this coverage, as it should be shared between all owners in the building and included in your service charge (Hausgeld). Contents insurance, which offers protection against damage to or theft of your belongings, isn’t required by law, but you may wish to purchase this anyway for extra peace of mind.