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Finding, Buying and Renting for Expats in Germany

Author: Jim Newham
Submitted: September 2013

Finding Property

In Germany, apartments are more common than houses, though both are available. Germans have a marked preference for renting, so if you are looking for rented accommodation you will be up against some stiff competition. This means you will need to be organised and act promptly if you are renting. When house-hunting, bear in mind that for both rented and purchased property, prices are affected by the total amount of floor space.

For German speakers, local newspapers and nationwide property magazines such as Marktplatz and Annonce are good sources of accommodation. Note that since Zu Verkaufen (For Sale) signs are rare in Germany, there is probably little profit in walking or driving around residential areas.

If you struggle with German, some websites which are either in English or have an English version are below:


Renting

Rented accommodation is of a high quality in Germany, and tenants enjoy ample legal protection. Monthly rental amounts are subject to legal upper limits, and eviction is a difficult and complicated process.

Once you have found a suitable place to rent, you will need to make a formal application. In addition to a completed application form, you will need to provide proof of your identity and income, a credit report from the German credit checking company Schufa and a certificate from your last landlord stating that you do not owe any monies. As the eviction laws strongly favour tenants, these measures are quite reasonable.

Rent in many larger cities, such as Munich, Hamburg and Cologne, is expensive. Initial rental periods in Germany can be as long as two years, so it is important that you are committed to staying in the area for this amount of time.

The initial outlay for renting can be high. Landlords will charge you one or two months' rent as a security deposit, and estate agents will charge commission of up to 3 months' rent plus VAT (currently at 19%.) Since estate agents represent most properties, you may have to pay this commission anyway. You may therefore be looking at 6 months' rent in total, so ensure you have enough money available.

Flat sharing is a common means of saving money among renters. Flat shares are normally arranged through websites and forums.

Be aware that, in Germany 'unfurnished' accommodation means pretty much bare. You may have to buy your own fittings such as lights, curtains and kitchen equipment – possibly including the kitchen sink! Note also the difference between Warmmiete ('warm rent' - including bills and certain services) and Kaltmiete ('cold rent' – excluding the same.)


Buying property

Though have risen a little more steeply in the last few years, real house prices in Germany have little more than doubled since 1975. The German housing market has not experienced a property bubble like many other Western countries.

There is little scope for property speculation in Germany. This is because most Germans are cautious about large investments and consider buying a house to be a one-off event. Furthermore, since only about 40% of Germans are homeowners, and few non-residents buy property, competition for house purchases is not particularly stiff. Furthermore, selling a property less than 10 years after it was bought makes you liable for 15% capital gains tax.

On the other hand, there are no restrictions on foreigners buying property in Germany. However, property prices are high, especially in larger cities and in the South, and obtaining a mortgage is usually difficult.

Though it is not completely necessary, it is probably best to have an estate agent, particularly if you do not speak German. You can work with more than one estate agent if you like.

The legal part of conveyancing is handled by a notary. The notary will liaise between buyer and seller, check with the land registry and ensure that there are no legal restrictions to purchase. It is also a good idea to have an independent lawyer to check other matters relating to the purchase.

Next the notary prepares a contract which confirms the purchase price, means of payment and other details. After this, a transfer ceremony is performed in which a notary reads out the contract, which, provided they are satisfied with its contents, both buyer and seller sign. The buyer legally owns the property once the land registry has been updated and other legal niceties have been resolved.

Fees and taxes are approximately as follows:

Property transfer tax3.5-4%
Notary fees1-1.5%
Registration fee1%
Estate agent's fee3-5%

 

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