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Buying a German property is 'straightforward'

17th August 2007 | back to article listings BACK    print this article PRINT

Following on from reports this week the that the German market still holds promise for the overseas buy-to-let investor, a property analyst has issued advice on what it takes to acquire a piece of real estate in the country. Prospective investors will be pleased to know that the conclusion reached was that buying a property in Germany is "straightforward and easy" for foreign nationals.

Anna Grybel, a property market researcher with Property Secrets, says that there are no restrictions in place on foreign nationals buying in Germany. She said most buyers use an agent, who will make an offer in the prospective buyer's name. Once the offer is accepted the lawyers will draw up a contract and money is only transferred after title of the property is registered in the buyer's name.

All taxes associated with the sale must be paid within 28 days of the contract being signed, while the whole transaction itself takes an average of 40 days, according to Ms Grybel. The agent will typically charge around three to six per cent of the sale price, plus a further nine per cent VAT.

Other taxes include the real estate transfer tax - which is 3.5 per cent nationwide and 4.5 per cent in Berlin - and the notary fee, which is usually between 0.6 and 1.5 per cent. Finally, the registration fee can be 0.2 - 0.5 per cent.

Perhaps the trickiest aspect for the potential investor in German property is to acquire a mortgage from a German bank. They are notoriously conservative and the borrower will have to show that they have a steady income with which they can back their repayments.

"Good candidates would include, for example, a couple with good, regular gross salaries or even better … a public sector employee who enjoys good employment conditions and high job security," explains Ms Grybel.

However, once the buyer has satisfied the bank that they are a suitable candidate for a loan, they can take advantage of some favourable terms. Long-term financing with a fixed interest rate for five to ten years is "characteristic of German mortgage lending".

This is because "it gives financial planning certainty", which is highly valued by borrowers. They can usually borrow up to 90 per cent loan to value and the interest rates, despite rising, are still relatively low at approximately five to 5.5 per cent at the time of writing.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3707.html. Alternatively, please see our full press release archive.

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