Accommodation in Berlin


Buy house or flat in Berlin


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Housing Market

Property in the capital comes at a phenomenal deal. For such a hip, forward-thinking city, property values are still well below that of other capitols like London or Paris. That said, nearly 90 percent of Berlin's population is too poor to purchase a place of their own. There is also a strong preference for renting within the cities in general. This dynamic is changing as the city continues to be gentrified and more and more foreign investors and expats see Berlin's potential.

In the downtown district of Mitte, property runs between 1,600 and 3,500 euro per square metre. In other areas, like trendy Freidchshain, property can be purchased for as little as 1,000 euros per square metre.

Expats Buying Real Estate

Anyone with a valid passport and adequate funds may buy property in Germany. However, owning property does not automatically give the purchaser the right to reside in Germany, you must have the proper visa. The difficulty usually lies in financing. Foreigners not residing in Germany or paying German income taxes will find it difficult to get financing for property acquisition. If financing can be found, it will probably not exceed 60 percent of the sale price.

How to Search for Real Estate

You should first determine what exactly you are looking for.

  • What's your price range?
  • Where do you want to live? (Consult the Geography section for areas of Berlin)
  • Do you want to live in a house (rare within Berlin) or a flat?
  • How many rooms do you need?
  • Would you prefer a modern home, or something traditional (altbau)
  • Do you require certain amenities like a gym, doormen, etc? These are rare in Berlin and will greatly limit your search
  • Do you have pets?
These factors will help define your search.

Estate Agent

Deals can be arranged by private parties (von Privat), but it is advisable and more common to use an estate agents (Immobilienmakler). In Germany, there is no requirement to work exclusively with any given agent. A good agent knows the legal pitfalls, ins-and-outs of housing in the area, and how best to navigate a contract and mortgage. This can save you hundreds of thousands of dollars in the long run.

The German Real Estate Association (Immobilien Verband Deutschland, IVD) is an association of estate agents, property officials, and real estate tax advisors. The IVD is a clearing house for information on buying and selling property in Germany.

Online Listing

Online listings can give you a great feel for the market and allow you to determine if a place fits your specifications before you spend time going to look at it.

Newspapers

If you prefer print, as even some sellers do, property sections can be found in most daily newspapers on a weekly or bi-weekly basis as well as online and through specialist property publications.

Public Postings

Many places have billboards offering advertisements for a variety of goods and services. It is rare to find property listings, but there may be useful postings. Laundrettes, cafes, grocery stores, community centers, and bars all might have private ads.

Surveys and Regulations

By law, houses older than 25 years must have new roofing, new windows and a new heating system. A professional survey helps determine the state of a property and helps avoid unforeseen costs. Find official surveyors (amtlich vereidigter Sachverstaendiger) from the local building office (Bauamt). It is also possible, and often cheaper, to hire an architect privately to survey the property.

A public notary will then check whether there are any restrictions on the sale and use of the property. If both parties agree to the terms of the contract, the notary submits the change of ownership to the government books and the transaction is noted in the land register.

Contracts

The rules governing the creation and execution of property contracts are covered by the federal property acquisition tax law (Grunderwerbsteuergesetzes). Before you sign any documents, including your contract with your realtor, have it looked over by a lawyer, estate agent, or advisor. If the contract is in German, which it will usually be, it might be worth the investment in a professional translator. It is extremely important that every element of a contract be understood before signing.

At the signing of the contract, the terms are read aloud in German. All parties must be present at the reading of the contract. Official identification papers are also required. The buyer has the right to clarify any part of the contract they don't explicitly understand.

All agreements concerning property must be notarized by a public notary in the land title registry (Grundbuch). On the notarization date, the seller agrees to transfer the property title and the buyer agrees to pay. The public notary oversees the transfer of the payments and titles so that neither party is exposed to any risk. It is important to stipulate in the contract, who precisely is responsible for any potential encumbrances (Belastungen) connected to the property. The notary is required to send a copy of the contract to the Finance Office (Finanzamt). When this is completed, the buyer will be asked to pay the property purchase tax (Grunderwerbssteuer). The public notary registers the transfer of property with the finance office. The finance office checks the permit for the transfer of property order agreement (Grundstuecksverkehrsordnung, GVO). Once this transfer is registered in the land registry, the property has officially changed hands.

To find a public notary use the Yellow Pages(Gelbe Seiten) under "Notar".

Mortgage

Real estate in Germany can be financed through a mortgage bank (Kreditbank) or most other banking institutions. In order to qualify for financing, it is usually necessary to show a history of regular monthly savings. The maximum term on any finance is usually 30 years at a fixed interest rate.

Fees

Fees are high in Germany. As a buyer, one can expect to pay up to 12 percent of the purchase price in fees.

  • Estate agent's fees - up to 7 percent
  • Variable estate agent commission fees (notary) - 1 percent
  • Variable estate agent commission fees (housing registry office) - 0.5 percent
  • Variable estate agent commission fees (purchase tax) - 3.5 percent

Taxes are declared at the finance office in the municipality where the property is located. To find a local municipal finance office in Germany: Steuerliches Info Center.

For foreigners not residing or working in Germany, financing is possible, but the expected mortgage loan would not be as high.

Property Acquisition Tax (Grunderwerbsteuer)

Property acquisition tax is currently 3.5 percent of the purchase price. The property's purchase tax must be paid through the finance office within one month of the tax assessment notice. Once it is paid (including VAT), the tax office will issue a clearance certificate (Unbedenklichkeitsbescheinigung). The transfer of possession of the property from seller to buyer is impossible without this document.

Investment

Investment opportunities should be long-term in Berlin as German law dictates that any property sold within 10 years attracts 15 percent capital gains tax. If a company is the purchaser of the property, it must show the relevant documentation from the Chamber of Commerce, which proves the legality of the company.

If a property owner rents out property, tax must be paid on the rent received. Rental income tax is calculated on a sliding scale. On top of this, an additional rental income tax must be paid. This extra tax, based on the rental income tax, is known as Soli. Advertising and management expenses as well as interest and depreciation costs can be deducted from this rental tax when filing tax returns.

Private owners who are not paying normal income tax in Germany, but who are earning rental income, must submit an annual tax declaration (Steuererklaerung fur beschraenkt Steuerpflichtige) to the Finance Office. There is a tax-free profit of around 6,000 euro for EU citizens.

Auction

Buying at auction is very exciting and can offer you a significant savings. Note that most properties are sold cheaply, but may need extensive renovation. This option is not recommended for first time buyers, and even experienced buyers should bring a friend or advisor as a second opinion.

To participate in an auction, you must register and show proof of financial eligibility. You must transfer an advance (Sicherheitsleistung) to the bank a few days before the auction. This is usually 10 percent of the starting price. Alternatively, you may bring travel checks on the day of the auction. If you do not purchase a property, the money is returned. Limited information is available, usually only the registration number of the property, the address, and some information about maintenance costs.

After buying an apartment at the auction, it'll take approximately 2 weeks to prepare the purchase contract. After signing the purchase contract the client has approximately 2-5 weeks to transfer the money.


Update 6/06/2011

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