Do you work in Germany and are you thinking about buying an apartment instead of renting? Why this could be a good decision, how to proceed and what has to be considered, I describe in this article.
According to the Federal Statistical Office, only about 42% of all households in Germany live in their own apartment. The majority live for rent. For many people in Germany, real estate is an acquisition for life. So they buy only once and live there for the rest of their lives. Especially for apartments, the market is very dynamic, so that there is no reason not to sell an apartment after a certain period of time, e.g. if you change your job
What are the advantages of buying an apartment?
In Germany, anyone (regardless of nationality or place of residence) can buy a condominium.
A condominium offers the following advantages:
- As a freelancer or as an employee with a limited contract or still in the probationary period, it can be difficult to get a rental apartment in Germany, since many landlords insist on an unlimited contract.
- The number of interested parties is often much smaller for a condominium than for a rental apartment.
- You can make changes in the apartment (e.g. change floor coverings, install new tiles in the bathroom, kitchen, etc.) without having to agree this with the landlord. When selling, such measures increase the sales price.
- Your monthly costs are lower.
The procedure for buying an apartment is as follows:
- Find an apartment,
- If necessary, clarify financing by the bank,
- Inspect the apartment,
- Sift through all relevant information, negotiate price, reach agreement,
- Check draft sales contract,
- Notary appointment (conclusion of purchase contract),
- Registration of the priority notice in the land register,
- Payment (notary informs that the requirements are met),
- Apartment handover,
- Move in.
How to find a condominium?
If you are looking for a condominium, apartment portals are the best way. Going directly to an estate agent and asking him to search for one is unusual in Germany and does not work well. In most cases, real estate agents are hired by sellers. They only have a very limited stock of properties. If there is something suitable, they will offer it to you, but they will not look for something especially for you.
The largest apartment portals in Germany are ImmoScout24, Immowelt and Immonet. Unfortunately all three portals are only available in German. But with Google Chrome, for example, it is possible to have the websites translated into English.
Although condominium are also advertised in regional newspapers or in smaller portals, the search via the large portals is the most convenient way. There is often a lot of information about the apartment and also pictures to give you a first impression.
You can enter your search criteria and also set up notifications, if something new comes in that fits your search.
Most of the offers on the portals are offered through real estate agents. This has advantages: The reaction time to inquiries is relatively fast, they know which documents a prospective customer needs, flexible inspection dates can be arranged with them and also the price negotiation is more pleasant.
On the portal itself, the exact address of the property is usually not given. You will only get this information from the real estate agent. If you are not so familiar with the area, it can be useful to go there before an inspection appointment and see if you like the surroundings at all.
So the first step, when you have found an interesting apartment, is to contact the advertiser and ask for the address as well as arrange an inspection appointment.
If you are looking for a condominium via a portal, you should consider the following points.
The following basic information should be visible in the expose and be checked:
- Photos from inside and outside,
- floor plan,
- year of construction,
- total number of floors and floor in which the apartment is located,
- number of rooms (bathroom and kitchen do not count here),
- Living space (square meters),
- Purchasing price,
- Car parking space,
- Type of heating,
- balcony / terrace,
- monthly common charge / maintenance fee,
- contact details of the advertiser (usually an estate agent).
If some of the items are missing (e.g. information about the floor, type of heating or the amount of the house money), this is not too bad and can be asked for when contacting the advertiser. However, the more details are missing, the more dubious the offer appears.
In the real estate portals there are partly also offers for dwellings, which are forced auctions. This is a different process than the “normal” purchase, involves additional risks and is not described here. Forced sales are not always visible at first sight. They stand out:
- A very low price. Since it is an auction, one does not know at the current time at all, which price will come out.
- They usually do not have real photos. The photos are marked with the hint „Musterfoto“ (sample photo).
- The advertiser sometimes has „Zwangsversteigerung“ (foreclosure) in his name.
- The street is usually included, with a house number replaced by “x” or “xxx”.
Be careful with apartments that are rented. The tenancy law in Germany is extensive and gives the tenant a variety of rights. There is indeed the possibility as an owner, if one needs the apartment itself, to give notice to the tenant, but this can lead to problems. Therefore, I recommend to buy only apartments for your own use that are not rented out.
Unfortunately, you cannot rely on the filter “unrented” for most portals. Rented apartments can be recognized by the fact that a rent is indicated in the advertisement. If the advertisement says “available by arrangement”, this should be questioned. The apartment could be rented. Also the term “capital investment” often indicates that the apartment is rented.
In Germany, apartments are sold unfurnished in most cases.
A fitted kitchen is often available, but not always. For this purpose, the description of the advertisement usually contains information and you should also see it on the photos.
What else is important during and after the inspection?
Inspection appointments for condominiums are usually conducted as individual visits. This gives you the opportunity to look at everything in peace and there is enough time for questions. When buying, the motto is: “Bought as seen”. So if you notice defects later on, liability is excluded in most cases.
When buying a condominium in Germany, you need to know that the purchase price is not all that is payable. Therefore the remaining costs must be included in your calculation.
The costs for the buyer are made up as follows:
- Purchase price
- Brokerage fee (approx. 3.5–7% of the purchase price)
- Notary fees (approx. 1% of the purchase price)
- Land registry (approx. 0.5% of the purchase price)
- Land transfer tax (approx. 3.5–6.5% of the purchase price)
The purchase price, which is indicated in the exposé in the real estate portal, is in most cases negotiable. In my experience, it is definitely possible to pay 10–15% less. The real estate agent is indeed interested in the price being high so that his commission is also high. But a quick sale at a slightly lower price is also interesting for him, because he can then use his time for other activities.
With regard to the brokerage fee, different rates have been established in the various federal states. With some brokers and in some federal states, both buyer and seller have to pay, with others only the buyer. As of 2021, a law will come into force in Germany that regulates a 50:50 split between buyer and seller.
The amount of the brokerage fee must already be stated in the exposé.
The broker is your contact person for all questions. He gets you the later mentioned documents, makes the appointments and accompanies you and can also give you information about the amount of the real estate transfer tax. These services are covered by the brokerage fee.
A purchase contract for a property must be notarized. It is common that the notary sends a draft of the purchase contract in time before the notary appointment, so that it can be checked. The notary is neutral and advises both buyer and seller. The buyer bears the notary costs for the purchase.
If the buyer wants to register a land charge for financing, additional costs are incurred.
If a land charge is currently entered in the land register, the notary will take the necessary steps to have it deleted. The costs for the deletion are borne by the seller.
Sometimes an approval of the property manager is required. This is also taken care of by the notary. This leads to additional costs.
The land registry office makes the priority note and then the entry in the land register and charges fees for this.
The amount of the land transfer tax depends on the federal state. It is important to know that land purchase tax is only paid on the property, but not on reserves and furnishings. The amount of the reserves as well as the type and value of the furnishings (e.g. fitted kitchen, lights, mirror cabinet in the bathroom) should therefore be recorded in the contract, which is then used to calculate the land transfer tax.
Before a contract of sale is concluded and preferably before the inspection, you should request the following documents from the broker or seller:
- Floor plan / building plans,
- site plan,
- calculation of living space and floor space,
- current extract from the land register,
- valid energy pass,
- declaration of condominium,
- insurance documents,
- minutes of owners’ meetings and common charge / maintenance fee settlements (for the last 3 years).
If you need financing for the purchase of the apartment, you should clarify this with your bank as soon as possible and get a commitment. Most real estate agents will only arrange a notary appointment if a written financing commitment is available.
In addition to the purchasing costs, the monthly costs must be taken into account. One item is the monthly common charge / maintenance fee. This amount includes, for example, the costs for the caretaker, heating costs, repair and maintenance costs, janitor and the financial reserves.
Electricity, internet, telephone are not part of the common charge and must be registered and paid separately. Often houses have central heating (gas or oil), which also produces hot water. But there are also apartments with gas-fired floor heating. Here the gas costs must be paid directly and are not included in the house money. Other houses have central heating, but no central hot water heating. The hot water is then produced in the apartment via a flow heater or boiler. Here, additional electricity costs are incurred. This is also the case if there is no central heating and the heating is done by electricity.
Depending on your individual situation, it might be a good idea to look at your last electricity bill so that you can estimate what to expect.
The minutes of the owners’ meetings, which regularly take place once a year, show among other things whether renovation work has been carried out or is pending.
Especially with older houses it is important that a sufficiently large financial reserve has been accumulated, so that e.g. the heating can be replaced or the facade/roof can be renovated.
In addition real estate tax has to be paid. The tax is relatively low. In order to know what to expect, you should have the last real estate tax statement shown to you
After the notary’s appointment, the transfer of ownership of the real estate takes place step by step. The notary supervises the process and informs you when all requirements are met and you can pay the purchase price. After payment of the purchase price the transfer can take place.
The handover date is also accompanied by the broker. Here a protocol with the following points should be kept:
- Electricity, water and gas meters,
- delivery of all keys.
- Handing over of invoices in case of recent repairs or purchase of electrical appliances that remain in the apartment.
- Work that still have to be done by the seller (set date). I have often experienced that not all furniture was disposed of and the seller had to come by with a trailer.
- Logging of defects and procedure for their elimination. These can be defects that were already recorded in the purchase contract and, if applicable, those that only occurred afterwards.
Perhaps the way to a condominium seems a bit complicated at first glance.
But it is not. The process is clearly structured and you always know where you stand and what needs to be done. Bad surprises are thus reduced.