Guide to buying German property
Guide to buying German property
Germany is one of the most popular countries in Europe for foreign-born residents to move to and for global business people to invest in, due to its strong economy and stable property market.
If you’re interested in moving to Germany, you can look forward to excellent employment, education, and healthcare, plus beautiful landscapes and a rich historical culture.
Several German cities are international financial hubs offering a variety of careers, while stately towns and rural villages offer the tranquillity of the German countryside just a short drive or train ride away from the nearest metropolis.
Though Germans have historically favoured renting over home ownership, investing in German real estate is becoming more popular for expatriates.
There are plenty of opportunities to purchase property in different areas of Germany, but it might be a bit daunting if you’re new to the idea.
Here’s a quick guide to buying property in Germany, from location and finance to living costs and quality of life.
Overview of the German real estate market
Despite the popularity of long-term rentals, in recent years low interest rates have led to a rise in people buying property in Germany.
There’s a high demand for residential property in Germany, driving higher prices in the most popular German cities:
Berlin
Düsseldorf
Dresden
Leipzig
Frankfurt
Hamburg
Cologne
Munich
Stuttgart
As the capital city, Berlin tends to attract the most foreigners, but Munich, Frankfurt, and Hamburg are often considered secondary capitals due to their unique living and working opportunities.
It’s worth looking beyond the ‘big 9’ cities too, as there are plenty of attractive areas with lower property prices scattered throughout the 16 states of Germany.
When it comes to real estate investment, Germany’s consistently stable market throughout global crises makes it a safe bet for overseas investors.
With the country’s ever-strengthening national infrastructure and rising demand for homes, now is the best time to secure a house or apartment in Germany.
German property prices
It’s difficult to measure an average house price in Germany, because prices can change drastically depending on the property type and location.
Like in most countries, properties cost more in urban areas than rural ones, with major cities having higher property prices than others.
According to Expatrio, the average cost of German property is about €3,386 per square metre, compared to €5,844 for properties in Berlin and €9,938 for properties in Munich.
Munich is currently the most expensive German city to buy property in, followed by other big 7 cities like Frankfurt and Cologne.
Berlin is one of the cheapest of the big 7 German cities.
Cheapest cities in Germany
If you’re looking for the cheapest state to buy a home in Germany, it’s best to keep in mind that properties are generally cheaper to the north and east and more expensive to the south and west.
According to Numbeo, these are some of the cities with the average cheapest property prices in Germany (per square metre):
Osnabruck - €2,107.75
Saarbrucken - €2,358.34
Jena - €2,900
Leipzig - €2,991.67
Dortmund - €3,008.34
Bremen - €3,175
Aachen - €3,375
Mannheim - €3,373.75
Dresden - €3,425
Karlsruhe - €3,794.72
The lower the cost of property in the area, the lower the cost of living is likely to be, and vice versa.
That said, it’s possible to find affordable properties in one of the more expensive cities if you know where to look and the timing is right.
Buying a house in Germany
All you need to buy property in Germany is a valid passport as proof of your identity and the appropriate financing.
You don’t have to live in Germany to buy property there, so you can rent it out while living in another country.
While you don’t need to be a German resident to buy property, purchasing a home in Germany doesn’t automatically get you a visa, permanent residency, or citizenship.
If you intend to move to Germany to live there, you’ll have to apply for a residence permit separately and register at the local office within 14 days of your arrival in Germany.
Finding and buying property is a similar process in Germany to most European countries:
Look for properties within your budget
Choose the property you want to buy
Make an offer to the seller
Get a notary to draw up the contract
Sign the contract and get the notary to register it
Pay any additional fees relating to the sale
We’ll go into a bit more detail about the financing process below.
Property tax and additional fees
There are some additional payments you should be aware of that come with closing a property purchase in Germany.
This includes a notary fee, interpreter fee (if needed), real estate agent fee, property sale tax, and setting up home insurance.
When it comes to property tax, Germany has a property transfer tax (Grunderwerbsteuer) rate of 3.5-6.5%, which must be paid within a month of the sale.
If you’re investing in a German property to let it out, you’ll also need to pay income tax on any rental earnings in Germany.
Now you know all about the process of buying a property in Germany, you can find out more about what it’s like to actually live there.
Cost of living in Germany
Germany is popular among foreign students, families, and retirees because of its high-quality education and career opportunities and a generally excellent standard of living.
It’s one of the safest countries in the world, with Germany placing 16th on the Global Peace Index, while the United Kingdom ranks at 42.
The climate isn’t too different from the UK with four distinct seasons, though the summers will be warmer in the south of Germany and winters colder in the north and east.
In exchange for colder winters, you’ll find more opportunities for skiing and snow sports in areas with mountains.
Germany is generally a peaceful country, with better pay for fewer working hours, more annual public holidays, and legal ‘quiet hours’ to make sure everyone gets their rest.
It’s relatively cheap to live in Germany compared to English-speaking countries like the UK.
Shopping around for utility, internet, and phone service providers is a similar process, but the end result is likely to cost less.
There’s also a mandatory fee for public service television broadcasting in Germany (Rundfunkbeitrag) which is around €18 a month, similar to the BBC licensing fee in the UK.
Grocery shopping in Germany is generally quite cheap, with plenty of discount supermarkets including Lidl and Aldi, plus farmer’s markets for fresh meat and vegetables.
There are also familiar European chains for affordable clothing and shoes.
When it comes to socialising, Germany offers a range of unique entertainment opportunities from art and cinema to food and drink.
Aside from standard living costs, you’ll need to know a bit more about earning a living and contributing to society in Germany.
Money and taxes in Germany
One of the first issues you might experience when moving to Germany is transfer fees for moving money from your home country into your German bank account. We can help you with this in various ways including introducing you to our Foreign Exchange Partner, Smart Currency Exchange .
Germany has an incremental tax system like the UK, so the tax rate gets higher the more you earn.
According to Expatica, these are the German income tax rates for 2021:
Earnings
Tax Rate
Up to €9,744
0%
€9,745 - €57,918
14-42%
€57,919 - €274,612
42%
€274,613 and above
45%
Previously, all taxpayers also had to pay a 5.5% ‘solidarity tax’ (Solidaritätzuschlag), but from 2021 only those earning €61,700 a year or more will have to pay this.
If you’re a registered member of a church, you’ll also have to pay an 8-9% ‘church tax’ (Kirchensteuer), but you don’t have to mention religious affiliations on tax documents.
All taxes plus pension, unemployment, and health insurance contributions will be deducted from your salary before it’s paid to you.
If you’re a UK national moving to Germany, double taxation regulations prevent you from having to pay tax in both countries for the same income.
Paying contributions into the German social security system (Sozialversicherungssystem) should entitle you to claim benefits in Germany if you ever need to.
Working in Germany
From science to finance, from media to manual labour, there are many opportunities in Germany for skilled workers.
Some companies have English as their primary language, so you don’t even have to be fluent in speaking and writing German to find a job.
According to the Organisation for Economic Co-operation and Development, Germany has the 6th highest employment rate out of 40 ranked countries.
Germany also has higher wages and fewer working hours than the UK, ranking 11th on the OECD’s chart of countries with the highest average wages and 3rd for the fewest hours worked.
This means it should be relatively easy to find productive employment in Germany with competitive wages, allowing you to live comfortably.
Of course, there are likely to be more job opportunities in bigger cities, but it’s possible to buy property in quieter areas to take advantage of lower costs and commute to a nearby city for work.
If you already have professional qualifications from your home country before moving to Germany, you can apply for recognition of your certifications in Germany so you can continue to work in your chosen industry.
Education in Germany
There’s a robust education system in Germany, with schooling being mandatory from ages 6 to 15, though most students stay in school until 18.
Before they start school, kindergarten or nursery is optional for children aged 3-6.
Some German public schools will teach exclusively in German, especially in rural areas, so if you have children who don’t speak German well it’s better to send them to an international school that teaches in English.
Higher education is free at public universities in Germany, even for non-German nationals, so it’s easier to pursue a degree than in countries with high tuition fees.
However, students do have to pay a ‘semester fee’ (Semesterbeitrag) of around €250-400 per semester, which covers the costs of using university facilities and public transport tickets.
Overall, Germany has a better than average educational system, ranking in the top 20 for reading, maths, and science out of 79 countries assessed by the OCED.
Healthcare in Germany
Germany has one of the oldest healthcare systems in the world, dating back to the 1880s.
It’s mandatory to have health insurance in Germany, whether you’re a permanent resident or not.
You must choose a healthcare insurer (Krankenkasse) and register with them through your employer, so they can contribute to your payments and deduct your own payments from your salary.
Your employer will pay around half of your contributions for you, but you’ll have to pay them in full yourself if you’re self-employed.
State health insurance is cheaper than private health insurance, but costs depend on your age and income.
According to the OECD, Germany is in the top 4 countries for high quality health services and ranks 5th for extent of healthcare coverage.
The accessibility of healthcare and relatively low costs have earned the German healthcare system a positive reputation internationally.
Transport in Germany
If you plan on driving in Germany, you’ll need to swap your UK driving licence for a German licence within 6 months – and remember to drive on the right.
You’ll also have to register your vehicle within 12 months if you bring it with you from your home country to Germany instead of buying a vehicle there.
You should brush up on German driving laws in advance, too.
It’s encouraged to use public transport in Germany, as there’s a good network of trams, buses, and trains with a variety of travel passes available.
It’s no surprise that Germany’s transport systems are so well-developed and connected, as Germany comes in 3rd out of 40 countries for highest investment in transport infrastructure.
Dedicated cycling lanes also make bikes an attractive option for city dwellers who want to help reduce air pollution.
Germany is highly invested in sustainability, with leading environmental policies for renewable energy and conservation, making it an ideal country to call home for the environmentally aware.
Get expert help with buying property in Germany
So there you have it – everything you can expect from buying a property and living in Germany.
If you still have questions about finding a property in Germany, our team of bilingual experts based in Dresden and Leipzig are here to help.
With our 35 years of experience, we can guide you through locating and buying German properties whether you’re an international investor or a family looking to start a new life in the heart of Europe.
Contact German Houses today to take the first step towards property ownership in Germany.