If you’re looking to invest in property, or simply want to escape Brexit, why not consider buying a house in Germany?
Buying real estate in Germany as a foreigner is a popular investment – whether as a permanent relocation for yourself, holiday home, or renting out to tenants. Plus, you don’t need to be a resident of Germany to buy property there.
Here’s a guide to documents needed to buy a house in Germany, and why you need a notary to complete a sale.
Why buy property in Germany as a foreigner?
Not too far away, Germany is a popular choice for British people looking to relocate or invest in property abroad.
Renting is very popular in Germany, particularly in cities like Berlin, but property owners may receive a low yield. There are also taxes for investors that can make it expensive, unless you’re planning to own the property for 10+ years.
As foreign investors are seen as more of a risk, you will be looking at a higher deposit than you would in the UK.
Don’t let any of this put you off though – buying a property in Germany is a popular investment. Many Germans stay put once they buy, houses are built to last, and interest rates on mortgages are attractively low. It’s a very stable market.
If you like the idea of escaping Britain for better public transport, safety, and work-life balance, give Germany a go.
Do I need to move to Germany to buy a house?
You can buy a house in Germany as a non-resident, for example buying a city apartment in Berlin to rent out.
As a foreigner investing in property, you don’t need to live in Germany to buy. However, you still need to be able to get a mortgage. The maximum you can borrow depends on residency status – non-residents can only borrow around 60%.
You will also need to prove you’re able to afford the mortgage, by meeting monthly income requirements.
What costs and documents are required?
As a non-resident who doesn’t live in Germany, you’ll also have to pay extra costs like notary fees and taxes like capital gains tax. You’ll also need to provide a number of documents translated into German (see our translation service):
- Proof of employment
- Latest tax returns
- Proof of equity
- Selbstauskunft questionnaire
The total cost of buying the property can often be around 10% of the purchase price – watch out for agent fees too.
The process of buying a house in Germany
Buying a house in Germany is similar to buying a house anywhere in the world. Typically, you will need to investigate mortgages and get an offer in principle, before you find and make an offer on your dream German property.
After you’ve made an offer, you’ll need a German notary to draw up the sale contract and (once finalised) witness you sign it. Then, the notary can properly register the sale, and you’ll have to pay the property sale tax around a month later.
It’s legally required to use a German notary when buying a house in Germany – German contracts need a witness.
Ratification of contracts in German law
If you’re buying a house in Germany as a foreigner, you may come across the term ‘ratification’ or ‘Genehmigung’.
If you appoint an agent or third party in Germany to handle the real estate transaction on your behalf, and to execute documents relating to the purchase on your behalf, you will likely need to sign a ratification deed or ‘Genehmigung’ in front of a UK notary and to have this document apostilled. Our experienced notaries in the UK can help with this process.
The ratification deed or ‘Genehmigung’ is a document that you sign to essentially ratify the document(s) that your agent/attorney/appointed third party representative has signed in Germany on your behalf.
Do documents need to be notarised or legalised?
We can help with the notarisation of ratification or ‘Genehmigung’ documents from Germany, ensuring they are notarised and legalised to the level required. We also have access to a network of document translators, if you need a translation.
Any last tips for buying property as a foreigner?
Buying a property in Germany requires careful planning. Germans take a long time to buy homes (the country has one of the highest percentages of renters), so it’s worth getting it right. Here’s a checklist of things to remember:
- The German property market is very popular, but initial buying costs can be high
- Expect to pay a higher deposit as a foreigner – you may only be able to borrow 60%
- Before making an offer on a German property, you’ll need a mortgage offer in principle
- German rules for offering mortgages are strict and require proof you can afford them
- Renting in Germany is popular, so yields can be low on buy-to-let properties in cities
- Nothing is final without a notary, so ensure any contracts are properly witnessed
What about selling a house in Germany?
If you’re in Germany and want to sell your property, watch out for taxes imposed on investors selling houses after less than 10 years. The German housing market is set up for people buying for life, so it’s good to consider this when buying. Sellers pay the lion’s share of agent fees too, and selling a house in Germany can be a slow process.
Your agent should be able to advise you on the timescales, and how to aim for a real estate price that is realistic.
Get in touch with us for streamlined notarisation of documents required to buy and sell property in Germany.