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Property purchase procedure in Germany

Property purchase procedure in Germany

Passport, valid visa (for non-EU citizens) and required amount of funds – these are all you need to buy a property in Germany. The property can be registered in personal name or in the company name. The process won't take long, when well prepared.

Who can buy property in Germany?
A resident of any country can easily buy a property in any part of Germany. You can also buy real estate using Power of Attorney (POA), travelling to Germany. Its authenticity be certified by Apostille and translated into German. If the purchase is registered in company name, you will need to provide a special document from the Chamber of Commerce, confirming the validity of the company, which is going to buy a property. A lot of foreign companies buy offices and warehouses and invest money in housing for their employees.

Land Registry (Grundbuch)
The first step would be a visit to Germany to view the property. Another important moment is the procedure of reviewing the “Grundbuch” (cadastral registration of real estate in Germany). An extract from Grundbuch can be received by the property owner, a notary or an authorized agent.
“Grundbuch” lists all the owners (present and future) and shows the presence of any incumbrances (like a mortgage). In this case, incumbrances must be removed from “Grundbuch”, for re-registration of property rights. These expenses are paid by the seller.

Notary (Notar) and Realtor (Makler)
In Germany, realtors and notars are certified and authorised by the State. Realtor often has exclusive rights to sell a property, confirmed by the contract between him and the owner. Some owners sell their properties without estate agents, but it is rather an exception to the rule, because not every owner is able to cope with all the work of finding a client, which often means considerable cost and legal conveyancing.
The whole process of sale and purchase is directly carried out by a notary. He is an independent expert who protects the rights of both the seller and the buyer. If the property is bought through estate agent, then usually the realtor provides his notary. Some realtors provide services of supporting foreign clients during the registration of real estate at an additional service fee. Translator and other services are paid separately. 

A bank account in Germany: payment, terms, mortgage
All payments related to the property purchase are made via bank transfer. You can open a bank account in Euros. This account can be opened by any foreigner. You will need your passport, proof of residential address and filled application form. The contract of sale includes payment terms. 
The whole process is monitored by the notary. He will check the ownership rights of the seller, do all paperwork and after signing the contract of sale he will open trust account. The buyer pays 10% of the purchase price. Of course, the client may change his mind. In this case, he will get the deposit back, minus a small administrative fee of the company. The client pays the full amount of the purchase price withion 4 weeks. When this payment is made, the notary sends all the documentation to the Office of Registration of right to property. After two months the Buyer gets an extract from the land registry and the notary transfers the money on account of seller.
This clear procedure rules out any kind of fraud and takes about 1-2 moths. However, in Germany there is another advantages for foreign client – mortgage on real estate. The borrower can determine the loan term. The interest rate (currently 3-5% p.a.) also depends on term of the loan.

To get a loan the borrower must have about 50% of his own capital and a steady income. This property must cost at least 50 000 euros and be located in a good area.

Extra payments during the process of buying property
On average, the amount of additional payments is about 10-12% of total sum. A client pays tax on the property purchase, notary services, costs of conveyancing, realtor commission. Property purchase Tax is about 3,5%. The re-registration of property rights won’t be made, until the payment of this tax and putting it into the “Grundbuch” 

Notary services and changes in the land registry will cost about 1,5%.
If the property is bought with the help of an agency, the realtor commission will be about 3-6% of the total cost of purchased property. This commission must be paid by a client. Note that the fees are subject to 19% VAT. 
Services of a translator, support during the inspection of an object and other small expenses.
Commercial real estate sometimes needs registration of business, hiring personal , organization of management and staff of development.
The key difference of buying property in Germany – is a complete transparency of the whole process. And most importantly – “green light” for foreign investors, that allows you to buy real estate in Germany quickly and easily. 


Real Estate Germany

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