Buying Foreign Property » Germany

German Property – in for the long-haul

BuyingForeignProperty — Tue, 30 Oct 2007 16:58:29 +0000

Many buying foreign propertys are looking to the German market to snap up a bargain. According to Halifax, Germany is the only western European country to have had negative property price growth in the last five years – and this downturn could lead to a property boom in the country.

House prices are low and Germany’s economy, once stagnant, is now starting to recover. There are no shortage of tenants and many large corporations are starting to buy up German commercial property. This has given confidence to the property market and some experts believe that this could start off a mini-property boom.

Berlin is the city that many have tipped for the best return on investment – with low property prices still pervading the city, bargains may be snapped up. There is no one ‘right’ type of property to buy – from apartments to houses, city living to country living, although city property may yield better rental incomes in the long-run. However, the luxury-end of the market is one of the strongest growing sectors, therefore luxury properties should definitely be one to keep an eye out for.

Outside of Berlin, Munich and Hamburg actually look to have stronger local economies and should the country’s property market pick-up, it is likely that these two cities will match, if not exceed, the growth of Berlin’s property.

However, one point to note is that any investors in the German property market should not be expecting good short-term gains. The German property market is best viewed as a long-term prospect with investors in for the long-haul – it is expected that the property market may take anything up to 10-15 years before German property reaches it’s full financial potential.

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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...

Germany – the Buying Process

BuyingForeignProperty — Tue, 17 Jul 2007 11:32:49 +0000

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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The cheapest city in Europe?

BuyingForeignProperty — Mon, 18 Dec 2006 10:39:05 +0000

According to a recent report, the German city of Leipzig is the cheapest city in Europe for property. One of the major reasons of this is that the city still bears the scars from World War 2, with many buildings still riddled with bullet holes. When Germany was reunified in 1990, 25% of Leipzig’s residents chose to uproot and return to the West, leaving a city with a huge surplus of properties and not enough people to fill them. In fact, even today, nearly every street bears a ‘For Sale’ sign and the local council are contemplating knocking down 20,000 apartments to make way for commerical property and roads.

The property surplus means that the prices of the houses are incredibly cheap – a studio apartment will set you back about £7,000, or a two-bedroomed apartment will be about £16,000. There’s nowhere in Europe which offers these sorts of prices, making the city an attractive proposition for foreign property investors. In fact, property prices are so low that you can even buy properties by the block. A block of 8 two-bedroomed apartments is usually priced at around £140,000, making it an attractive propostition. The apartments are smaller than most other European cities, so buying ‘in bulk’ makes sense as you can minimise legal and purchase fees. Many of the blocks will have already been restored, and some will boast features such as swimming pools or saunas.

Even buying a block which needs to be restored can be a good idea – the city has excellent rental potential and there are plenty of tenants looking for long-term leases. Annual yields of 10% net are not uncommon. Once bought, a management company can be hired for £1,200 a year, meaning you can sit back and leave the property to run itself.

German companies such as BMW and Porsche have recently setup hubs in Leipzig, and the city is the centre of trade for international companies such as Amazon and DHL, meanng Leipzig looks to have a bright future. If you only have a small budget, Leipzig is definitely the place of choice to buy – with businesses flocking to the city, it is only a matter of time before the property prices start to increase and you will achieve a superb return on your investment.

If you would like to see a list of properties currently for sale in Leipzig, please click here.

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