Germany – the Buying Process

Once you have found your perfect property in Germany, the first thing you should do is find a good notary or lawyer. In Germany, a legal representative is required to carry out all legal work and contract obligations as well as ensuring that there are no existing liabilities on the property. When the sale is completed, the notary will register the amended title deeds with the local land registry, allowing the title to transfer to the new owner. When choosing a notary or lawyer, it is advisable to pick one who speaks your language fluently as well as German and who has a good understanding not only of German law, but also of your own country’s laws, particularly in the areas of tax.

Banks in Germany are usually happy to lend to foreign property investors. Mortgage rates tend to be fairly low and it is reasonably easy for foreign property investors to get a German mortgage. However, most banks will normally only lend up to 70% of the property purchase price so investors must find about 30% of the property price as a deposit. Banks also tend to insist that the investor has a track record of monthly savings of up to six years prior to the property purchase before they will lend. The maximum mortgage time allowed is 30 years and the rate of interest can be fixed in advance.

A contract will need to be exchange. Valid contracts contain the following information:
– The correct names and addresses of the vendors and buyers
– The correct address of the property being transferred
– The purchase price of the property along with any terms and conditions associated with the payment
– What will happen if either party fails to live up to the terms of the contract for example whether compensation will be paid by either party

Once the contract has been signed by both parties, the notary will ask for the change to be made in the land register. When the change has been completed, the vendor will receive payment for the property. In the time between the change being requested and the request actually being actioned, the purchase money is often held in an account held by the notary.

Germany Factfile

Timezone: GMT+1
Deposit Required: Negotiable. Generally lenders ask for 30% of purchase price.
Agent’s Fees: Budget 6% for legal fees and 1% for other fees
Tax: There are plans to introduce a 20% capital gains tax
Peak Letting Season: May through September

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