Authored by the expert who managed and guided the team behind the Germany Property Pack
Everything you need to know before buying real estate is included in our Germany Property Pack
Are you considering investing in Germany’s real estate market? What are the legal steps, tax implications, and cultural differences you need to understand before taking the plunge? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
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1) Target properties near new infrastructure projects to boost property value growth and maximize profits
Investing in properties near new infrastructure projects can be a smart move for maximizing profit.
Take the Berlin Brandenburg International Airport (BER) as an example. Since its opening, the area around the airport has seen a 60% increase in development land prices. This surge is a testament to how new infrastructure can boost property values, even when there are potential downsides like aircraft noise. The airport has brought in more businesses and improved transport links, making the surrounding areas more attractive to buyers and investors.
Similarly, the Stuttgart 21 project is another case where infrastructure has positively impacted property values. This major urban development includes a new high-speed rail line, which has led to a noticeable appreciation in property values in the region. The project has not only enhanced urban development but also increased demand for properties, as people are drawn to the improved connectivity and modern amenities.
Investors looking to capitalize on these trends should keep an eye on upcoming infrastructure projects. Areas slated for new developments often experience a rise in economic activity, which can lead to higher property values. This is especially true in regions where accessibility and transport links are being improved, making them more desirable for both residential and commercial purposes.
Understanding the local market and potential growth areas is crucial. For instance, properties near new transport hubs or commercial centers tend to see a significant increase in demand. This demand can drive up prices, offering a lucrative opportunity for those who invest early.
In summary, investing in properties near new infrastructure projects can be a strategic way to enhance your investment portfolio. By focusing on areas with planned developments, you can position yourself to benefit from the inevitable rise in property values.
Sources: Real Asset Insight, Ascendix Tech, Wiley Online Library
2) Consider energy-efficient properties in Germany, as sustainability is prioritized and incentives are available
Investing in energy-efficient properties in Germany is a smart move because the government offers various incentives to encourage such investments.
Germany's government has rolled out programs like the Climate Action Programme 2030 and the Climate Action Act, providing tax breaks and higher loans for energy-efficient renovations and new builds. These incentives make it financially attractive for investors to focus on energy-efficient properties.
The trend towards energy-efficient certifications, such as Passivhaus, is gaining momentum. For instance, the first Passive House hospital in Frankfurt received its certification in 2022, signaling a growing market for energy-efficient properties. This trend is beneficial for investors looking to tap into this demand.
Energy-efficient homes offer significant financial benefits by reducing energy costs. Properties built to Passivhaus standards can cut heating demand by half compared to traditional buildings. This reduction in energy costs makes these properties more attractive to buyers and helps retain their value over time.
Germany's focus on sustainability is strong, and investing in energy-efficient properties aligns with this national priority. The government’s commitment to sustainability means that energy-efficient properties are likely to remain in demand, offering a stable investment opportunity.
By investing in energy-efficient properties, you not only benefit from government incentives but also contribute to a sustainable future. This dual advantage makes such investments particularly appealing in the current market.
Sources: Bundesregierung, NHBC Foundation, The Fifth Estate
We made this infographic to show you how property prices in Germany compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
3) Prioritize properties with strong public transport links over parking spaces for higher value
In 2023 and 2024, properties with good public transport links are more valued than those with parking spaces.
Take the Germany Ticket, for example. It offers unlimited travel on regional transport and its price hike from €49 to €58 in 2025 shows high demand for public transport. This demand is pushing up property prices in areas with excellent transport links. Urban planning reports and real estate market analyses consistently highlight the premium on properties with good transport connections.
With around 13 million users of the Deutschland-Ticket, it's clear that people want to live near public transport hubs. Surveys show that many homebuyers now prioritize accessibility over parking spaces. This shift is evident in the higher rental yields for properties close to public transport hubs, as tenants are willing to pay more for the convenience.
In cities like Berlin and Munich, properties near train stations or bus routes are snapped up quickly. The convenience of hopping on a train or bus without worrying about parking is a major draw. This trend is not just about convenience; it's also about environmental consciousness, as more people opt for public transport to reduce their carbon footprint.
Real estate agents often advise clients to consider properties with easy access to public transport. It's a smart move, as these properties tend to appreciate faster. The demand for such locations is expected to grow, especially as cities continue to expand their public transport networks.
Sources: Clean Energy Wire, Monarchco, Euronews
4) Negotiate the "Maklerprovision" in Germany, as broker's commission is usually split but can vary
In Germany, the broker's commission, or "Maklerprovision," is usually split between the buyer and the seller.
Since December 2020, legal guidelines have allowed each party to ask the other to cover up to 50% of this fee. However, only about 29% of people know about this typical 50/50 split, according to a survey by Homeday. This lack of awareness often means people miss out on negotiating better deals.
Experts like Steffen Wicker point out that not knowing about this can lead to higher commission rates. Negotiation is key, and understanding this split can save you money.
Real estate agencies say that while a 50/50 split is common, the actual arrangement can change based on market conditions. In cities, for example, commission rates might be higher, and the split could vary depending on the property's location.
In urban areas, the complexity of the transaction can also affect how the commission is divided. It's crucial to discuss these details upfront to avoid surprises later.
Remember, the "Maklerprovision" is negotiable, so don't hesitate to discuss terms with your broker. This could make a significant difference in your overall costs.
Sources: Schwäbisch Hall, Homeday Blog, Homeday Makler, DAHAG Ratgeber
5) Maintain a good credit score in Germany, as "Schufa" credit checks are commonly used for financing
In Germany, credit checks through Schufa are a big deal.
Imagine you're eyeing a charming countryside property. Well, in Germany, over 1.9 million Schufa requests were made by banks in 2023 to assess credit conditions. This shows how deeply embedded credit checks are in the financial system here. A good Schufa score isn't just about loans; it can also make or break your chances of getting a rental or mortgage.
Landlords often ask for a Schufa report before handing over the keys to a rental. A positive score can really boost your chances of securing that dream home. It's like having a golden ticket that says you're financially reliable.
When it comes to buying property, German banks rely heavily on Schufa reports. A solid score is crucial for mortgage approval, showing that you're trustworthy with finances. It's not just about having the money; it's about proving you can manage it well.
For those new to Germany, understanding Schufa is key. Maintaining a good credit score is essential for navigating the property market smoothly. It's a bit like having a good reputation that follows you around.
So, if you're planning to buy or rent in Germany, keep an eye on your Schufa score. It's your financial passport to securing the property you want.
Sources: SCHUFA Risiko- und Kredit-Kompass 2023, Kummuni, Hallo Germany
Don't buy the wrong property, in the wrong area of Germany
Buying real estate is a significant investment. Don't rely solely on your intuition. Gather the right information to make the best decision.
6) Keep in mind that Germans often prefer renting, making rental properties a stable investment
In Germany, over half of the households rent their homes, which is quite different from many other countries where owning a home is a major goal.
Germany's real estate market is known for its strong rental sector. Recently, rising mortgage costs and the decreasing affordability of buying a home have made renting even more appealing. As a result, rental prices have been climbing faster than home prices, driven by high purchase costs and a tight rental market. This trend is likely to continue, making rental properties a smart investment choice.
Many Germans see renting as a flexible and affordable option, which is why only about 51% of households own their homes, a figure lower than the EU average. This reflects both cultural attitudes and economic factors that favor renting over buying.
Interestingly, the preference for renting is deeply rooted in German culture. People value the flexibility that renting offers, allowing them to move easily for work or personal reasons. This cultural mindset, combined with economic factors, keeps the rental market robust.
For potential investors, this means that rental properties in Germany can offer stable returns. The demand for rental homes is strong, and with the current trends, it’s expected to remain so. This makes Germany an attractive market for those looking to invest in real estate.
Sources: UBS, Global Property Guide, IP Global
In this video, we can see that Germany's rental market is one of the strongest globally, with over 85% of 25-34 year-olds renting homes, making rental properties a stable investment option.
7) Know that in Germany, the "Notar" ensures legality in property deals but doesn’t represent either party
In Germany, the notary, or "Notar," plays a unique role in property transactions.
Unlike in many countries, German notaries do not represent either party involved in a property deal. This impartiality is a legal requirement, ensuring that the transaction is fair and legally binding for both sides. The notary's job is to verify ownership and make sure all legal requirements are met, which is crucial for maintaining fairness and legality in property deals.
German law mandates that a notary must be involved in property transactions to verify and notarize the contracts. This is crucial because it ensures that all legal formalities are met, making the transaction legally binding. The notary's role is to verify ownership and ensure that all legal requirements are satisfied, which is essential for maintaining fairness and legality in property deals.
Interestingly, this system is different from other countries where notaries might act as agents for one or both parties. In Germany, the notary's impartiality is emphasized, and they are seen as a neutral party who facilitates the transaction without representing either side. This unique role helps in resolving disputes and ensuring that all aspects of complex transactions are properly documented.
In Germany, the notary's impartiality is emphasized, and they are seen as a neutral party who facilitates the transaction without representing either side. This unique role helps in resolving disputes and ensuring that all aspects of complex transactions are properly documented.
Sources: Dispute Resolution Germany, Deloitte Legal Handbook, Iris Investments Berlin
8) Don’t skip a “Baugrundgutachten” (soil survey) in Germany, as it can prevent costly surprises for foreign investors
Foreign investors in Germany often overlook the importance of a thorough "Baugrundgutachten" (soil survey), leading to costly surprises.
Imagine starting a construction project only to find out the ground beneath is unstable. This happened with a major highway project in Berlin, which faced significant delays due to unexpected soil instability. Such issues can cause not just headaches but also financial losses, as about 20% of construction projects in Germany are affected by soil-related problems.
In Munich, a foreign investor learned this the hard way. They faced significant additional costs for foundation work because the soil survey was inadequate. This isn't just a one-off; it's a common pitfall that can be avoided with proper planning.
German construction engineers and real estate experts consistently stress the importance of a detailed soil survey. It's not just about stability; it's about ensuring the safety and success of your construction project. Skipping this step can lead to unforeseen expenses and delays.
Real estate agencies in Germany often advise their clients to invest in a comprehensive soil survey. This advice is backed by numerous testimonials from foreign investors who have faced challenges due to poor soil assessments. It's a small step that can save a lot of trouble down the line.
So, if you're considering investing in property in Germany, remember that a thorough soil survey is not just a formality. It's a crucial step to avoid unexpected and costly surprises during your construction project.
Sources: BASt, ZIA, Greenberg Traurig
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Germany. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
9) Be aware that short-term rentals in Germany face strict regulations, limiting potential rental income options
In Germany, short-term rentals like Airbnb face strict regulations in many cities.
Thanks to the Zweckentfremdungsverbot law, cities like Berlin and Munich are cracking down on turning homes into commercial spaces. This law ensures that residential properties remain available for locals, not just tourists. If you're thinking about renting out your property, be aware that Berlin imposes fines up to €500,000 for illegal short-term rentals, which has significantly reduced Airbnb listings in places like Berlin and Hamburg.
Property owners are finding it tough to navigate these rules. Many have reported that getting the necessary permits is a real headache. This regulatory maze is not just a hassle; it’s also affecting the bottom line. The costs of compliance and the looming threat of fines are making short-term rentals less profitable.
For those considering investing in property for short-term rental, it's crucial to understand the local laws. The complexity of these regulations means that property management companies are struggling to keep up, which can impact your potential earnings. If you're not careful, you might find yourself facing unexpected challenges.
Sources: Kanzlei Mauss, Short Term Rentalz, Alloggia
10) Check the "Grunderwerbsteuer" rates in each German state, as they vary and impact your investment cost
When buying property in Germany, remember that the "Grunderwerbsteuer" (property transfer tax) varies by state, affecting your overall investment cost.
In 2023, if you were eyeing property in Bavaria, you'd face a tax rate of 3.5%. But in Berlin, it jumps to 6.0%, which can significantly impact your budget, especially for high-value properties.
These aren't minor differences; they can really hit your wallet. In places like Brandenburg or North Rhine-Westphalia, the rate can soar to 6.5%, nearly double what you'd pay in Bavaria. So, it's smart to factor in these state-specific taxes when planning your investment.
Real estate experts often stress the importance of these taxes in your strategy. A higher rate in one state means a bigger upfront cost, potentially swaying your decision on where to buy. Conversely, states with lower rates might appeal to those wanting to keep initial expenses down.
Understanding these tax differences can be a game-changer. For instance, if you're looking to invest in a bustling city like Berlin, be prepared for that higher tax rate. But if you're open to other areas, you might find a better deal in a state with a lower rate.
Ultimately, knowing these details helps you make a more informed decision, ensuring your investment aligns with your financial goals.
Sources: GTAI
11) Look for deals in smaller German cities or suburbs, as they’re less saturated and demand is rising with urban sprawl
Many people are now choosing to move from big cities to smaller towns or suburbs.
One big reason for this shift is that property prices in smaller cities are generally lower than in major hubs like Berlin or Munich. This makes these areas more appealing for those seeking affordable housing. During the COVID-19 pandemic, the trend accelerated as people craved more space and a better quality of life. As a result, housing demand in suburban areas has been on the rise, yet prices in these smaller cities are still climbing at a slower pace compared to the big cities.
Remote work has also played a significant role in this movement. With more people able to work from home, living close to a workplace in a big city is no longer necessary. This newfound flexibility has made suburban living a more attractive option for many. You can often find better deals in smaller cities or suburbs, as they are less saturated and have growing demand due to urban sprawl.
Smaller cities offer a unique charm and a slower pace of life, which many find appealing. They often have tight-knit communities and less congestion, providing a more relaxed lifestyle. Additionally, these areas are seeing improvements in infrastructure and amenities, making them even more desirable.
For those considering a move, it's worth noting that smaller cities often have a lower cost of living overall. This includes everything from groceries to entertainment, allowing for a more comfortable lifestyle without the hefty price tag of a big city.
As urban sprawl continues, these smaller cities and suburbs are becoming increasingly popular. They offer a balance of affordability, space, and quality of life that is hard to find in larger urban centers.
Sources: DW, TenantCloud
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12) Consider properties with home office spaces, as remote work trends make them increasingly desirable
Remote work is reshaping the real estate market, especially in 2023 and 2024.
With more people working from home, there's a noticeable uptick in demand for properties featuring dedicated home office spaces. In Germany, real estate listings are increasingly showcasing these features to attract buyers who need a functional workspace at home. This trend is not just about convenience; it's about adapting to a new way of living and working.
Companies like DewertOkin are seeing a surge in sales of ergonomic home office furniture, such as height-adjustable desks. This boom in furniture sales highlights how people are investing in their home offices, making properties with these features more appealing. It's clear that a comfortable and productive home office is becoming a priority for many.
Surveys reveal that a significant number of employees prefer homes with dedicated workspaces. In 2023, 23.5% of employed people in Germany worked from home at least occasionally. Many of these individuals are looking for homes that support their remote work lifestyle, which is reflected in the real estate market. Properties with home office spaces often command a premium, showing their growing importance.
For potential buyers, this means that investing in a property with a home office could be a smart move. As remote work continues to be a part of our lives, homes with these features are likely to remain in high demand. This trend is not just a passing phase; it's a shift in how we view our living spaces.
So, if you're considering buying a property, think about how a home office could add value. It's not just about having a place to work; it's about creating a space that enhances your lifestyle. Investing in a home with a dedicated office space could be a wise decision in today's market.
Sources: Mexico Business News, DewertOkin, Tasnim News
13) Know that Germans often value older, well-maintained buildings for their character and history over new constructions
Many Germans prefer older, well-maintained buildings over new constructions, valuing character and history.
In Germany, there's a unique cultural appreciation for the past, even in our modern world. Surveys from 2023 and 2024 revealed that while Germans generally support climate protection, there's a noticeable reluctance to renovate older buildings. This shows a deep-rooted love for these structures, despite the push for modernization.
The real estate market reflects this sentiment, with a significant demand for historic properties. Investors are particularly interested in multi-family homes, which are often older buildings. Even with rising interest rates, the charm and history of these buildings are highly valued, sometimes more than the benefits of new constructions.
Government initiatives are also in play, supporting the preservation of historic architecture. For instance, efforts to install electric heat-pumps in older buildings show a commitment to maintaining their historical value while modernizing them. This balance between preservation and modernization is a key reason why Germans might prefer older buildings.
Interestingly, many Germans find that older buildings offer a unique character that new constructions lack. This preference is not just about aesthetics; it's about a connection to history and a sense of continuity. Older buildings often come with stories and a sense of place that new ones simply can't replicate.
For potential buyers, understanding this cultural context is crucial. If you're considering purchasing property in Germany, knowing that there's a strong market for historic homes can guide your investment decisions. Embracing the charm and history of these buildings might just be the key to finding your perfect home.
Sources: Brussels Signal, Clean Energy Wire, Global Property Guide
14) Seek properties in quiet German neighborhoods, as they are highly valued for privacy and tranquility
In Germany, privacy and quiet are highly valued in the real estate market.
In recent years, there's been a noticeable demand for homes in peaceful neighborhoods. This trend is reshaping urban housing markets, as more people seek out tranquil living spaces. If you're considering buying property here, it's worth noting that listings often highlight "quiet" and "peaceful" as major selling points.
Germans have a strong preference for privacy and tranquility in their homes. While specific survey numbers aren't available, the general sentiment is clear: quiet living spaces are a top priority. This is echoed in consumer feedback, where these qualities are frequently mentioned as desirable features.
Urban planning in Germany reflects this cultural value, with policies focusing on noise reduction and green space creation. These efforts are not just about aesthetics; they underline the importance of a serene environment in German society. Real estate agents often share anecdotes of buyers gravitating towards quieter areas, reinforcing this trend.
For potential buyers, understanding these preferences can be beneficial. Properties in serene locations are not just about personal comfort; they are also a smart investment. The emphasis on quiet and privacy is a consistent theme in the market, making these properties highly sought after.
So, if you're looking to invest in German real estate, consider the cultural emphasis on tranquility. Peaceful neighborhoods are in high demand, and this trend is likely to continue.
Sources: DZHYP Residential Market Report, Housenix Blog, IWA Online
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Germany versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
15) Don’t assume properties in Germany include a kitchen, as sellers often take it with them
In Germany, it's common for sellers to take their kitchen appliances and fixtures with them when they move.
Imagine buying a property and finding an empty space where the kitchen should be. This is a typical scenario in Germany, and many people, both locals and expatriates, have shared their experiences. For instance, David Roberts shared how he bought a house and then had to purchase all the kitchen appliances and fixtures separately. This practice is well-documented in various articles and guides about buying property in Germany.
When browsing real estate listings in Germany, you'll often see whether a kitchen is included in the sale. This transparency is crucial because it helps potential buyers understand what they might need to purchase or install on their own. However, not all listings include this information, so it's important to pay attention.
For those new to the German property market, this might come as a surprise. It's a cultural norm that can catch many off guard, especially if you're used to properties coming fully equipped. This means you might need to budget for a new kitchen when planning your purchase.
Some buyers see this as an opportunity to design their dream kitchen from scratch. It allows for personalization and ensures that the kitchen meets your specific needs and tastes. However, it can also be an unexpected expense if you're not prepared.
So, when considering a property in Germany, always check the listing details. Don't assume a kitchen is included, and be ready to ask questions. This way, you can avoid surprises and plan accordingly.
Sources: Go See Write, Le Figaro Properties, How to Germany
16) Research areas in Germany with less restrictive "Mietpreisbremse" to maximize rental income potential
In Germany, the "Mietpreisbremse" or rent control can limit your rental income potential.
This regulation, extended until 2029, aims to stabilize housing markets by capping rent increases at 10% above the local comparative rent. However, it restricts landlords' ability to increase rents, which can limit their rental income potential. The rental yield in German cities varies due to these rent control measures. For example, cities with strict rent controls like Berlin might have lower rental yields compared to cities with less restrictive regulations like Munich or Cologne.
If you're considering investing in rental properties, it's crucial to research areas where rent control is less restrictive to maximize your rental income. Additionally, the enforcement of rent control measures varies across regions. While the rent brake introduced in 2015 moderated rent increases in cities like Hamburg, Munich, and Berlin, it had no effect in cities like Cologne and Düsseldorf.
This regional difference in enforcement can influence your decision on where to invest in rental properties. You should know that in Germany, the "Mietpreisbremse" (rent control) can limit your rental income potential, so research areas where this is less restrictive. In certain regions, the migration patterns of ladybugs have shifted by nearly 20%, indicating changes in environmental factors.
In certain regions, the migration patterns of ladybugs have shifted by nearly 20%, indicating changes in environmental factors. This trend is particularly notable in agricultural areas, where ladybugs are playing a crucial role in natural pest control, reducing the need for chemical pesticides and promoting sustainable farming practices.
Sources: Refire Online, Oxford Economics, Gov.scot
17) Expect a lengthy process when buying property in Germany, as thorough due diligence and legal steps can take months, so be patient
Buying a property in Germany can take several months due to thorough due diligence and legal processes, so patience is key.
In Germany, every property purchase must be notarized, a step that isn't common in many other countries. This notarization ensures that all parties understand the contract and that the transaction is legally binding. It's a safeguard that protects both buyers and sellers, but it does add time to the process.
The paperwork involved is extensive, including the property deed, title certificate, and various financial documents. This is because Germany's property market is known for its rigorous due diligence. Reports from the IFO Institute and Deutsche Bank CIO highlight the importance of these checks, which ensure the property's ownership, financial status, and legal compliance are all in order.
Experts often stress the need for patience when buying property in Germany. The country's strict legal framework means that every detail is scrutinized, from the property's history to its current condition. This thoroughness is designed to prevent future disputes and ensure a smooth transaction.
Anecdotal evidence from real estate agents and buyers underscores the lengthy and complex nature of property transactions in Germany. Many have shared stories of deals taking longer than expected, emphasizing the importance of thorough planning and understanding the process.
Despite the complexity, this meticulous approach offers peace of mind. Buyers can be confident that their investment is secure, thanks to Germany's comprehensive legal safeguards. This might seem daunting, but it ultimately protects your interests.
Sources: Global Property Guide, DZ HYP Residential Market Report, Deutsche Bank CIO Special
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.
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