Can a Foreigner Buy Property in Germany?

Buying a property is one of the most important decisions in our life; however, when purchasing real estate abroad or as a foreign citizen, it might become very complicated. How can you buy a house or apartment in Germany, and how to finance it as a foreigner – these are two primary questions we are answering in this post.

Foreigners are allowed to buy real estate in Germany. Both a private person of foreign origin and a legal entity can purchase a property in Germany. Moreover, there are no legal restrictions regarding this process. You can buy a house/apartment the same way a German national would do.

Although, some countries (also in Europe) have specific regulations on when and under which circumstances foreigners are allowed to buy a property. Germany is one of the most accessible places to invest in real estate. You will learn about all regulations and the entire buying process in this post.

How To Buy a Property as a Foreigner in Germany?

Did you know then even Germans aren’t allowed to buy property in some foreign countries? What about other nationalities, and does it depend on where you come from at all?

Everything is highly regulated in Germany as so the sale of property and especially to foreign citizens. The homeownership ratio in Germany is only around 50%; if you want to be a part of those lucky ones, there aren’t many obstacles in your way.

Germany allows foreigners to purchase a property without any restrictions; neither citizenship nor origin plays a role; they just need to follow the same steps German citizens go through. Moreover, as a foreigner, you can buy a self-occupied house or a house for investment purposes.

In fact, the rules regarding the sale of real estate are much simpler and easier than in many other countries. Therefore, if you want to purchase a property as a foreigner, you can do so without any restriction.

Furthermore, the residence status of the person who buys a property in Germany is unimportant too. With that said, you don’t even have to reside in the country and can just travel there to buy your dream house.

The problem can only arise when it comes to financing, depending on how you plan to do it.

Keep in mind, that acquisition of real estate does not lead to a residence permit or visa, like in some countries like Cyprus, Portugal, or even Serbia.

The Process of Purchasing a House or Apartment in Germany

Generally speaking, Germany is a great place to invest in real estate, with increasing prices (and so appreciation) and very low-interest rates thanks to a good economic situation. Moreover, the country has a very stable property market.

Long-term mortgage rates are at an all-time low, between 0.6 and 2.5%, and house prices are far more moderate than in other places in Europe. Getting a mortgage from the bank for as low as a 1 – 2% interest rate is possible.  

Now that you are certain about investing in real estate let’s see which process awaits you when buying a property in Germany. We will surely start with the search.

Find out how much a house costs in Germany so that you can budget your money in a better way.

1. Search for the Right Property

How and where to look for a property in Germany? Which region, city, or village is the best? All these questions probably come into your mind at some point.

Regarding houses for sale in Germany, location is the most crucial factor that influences the price but also the liquidity and perspective of your investment in real estate. Only a few people want to buy a house in the middle of nowhere.

Since real estate in Germany is a long-term investment, a good infrastructure around is very important. It is recommended to hire an estate agent to help with the search.

If you don’t want to pay fees and have already an approximate location in mind, you can start with a search on free platforms such as:

Among them, the most popular site is Immobilienscout24.de. Once you have found good options start with talking to owners and making appointments to see the place.

People in Germany don’t put the “For Sale” sign in front of their house, so the only option is to look online or to refer to one of many real estate companies.

Additionally, you could look at local newspapers, but this is a rather outdated way and works only locally. When searching for your property, be careful with low prices. These may be older properties that require more investment in renovation.

Properties in Germany are either sold privately (by the landlord) or through an estate agent. If you see “von privat” in the advertisement, it means that no estate agent is involved. Expect to pay a commission to the agent when choosing a non-private listing.

2. Meeting Landlord and Visiting the Property

Once you have selected objects you like, schedule a meeting to see the house. In the case of the private listing, the owner personally will show you the property. It’s not the case when working with the real estate agent; the agent will do it instead. Therefore, you won’t get a chance to meet a landlord only after you have made a decision.

3. The Purchase Process

Agree to the price and terms

Firstly you need to agree on the price and terms that will satisfy you and the owner. Afterward, the notary can draw up a sale contract accordingly.

Get your finances in order

The main question which comes up when buying a property is how you will finance it. Do you have enough money to make the first payment for a loan, or maybe you even have the whole amount to purchase the property?

The most common way is to take a mortgage. As a foreigner, it might not be that easy. Read below for more information on the entire process of lending money in Germany.

Get a mortgage if needed – learn how to do it in this article.

Send money from abroad

One of the ways to finance your future purchase is to send money from abroad to Germany. But think carefully about how will you send money, in cash, in banking transfer, or by using remittance services?

Companies like Wise, CurrencyFair, Remitly, Western Union, MoneyGram, and WorldRemit are the most commonly used providers to send money to Germany.

Yet, with Wise, you can send money to Germany reliably, quickly, and with the lowest fees.

Sign the contract

Once you are sure about your finances, you can sign the contract and make the payment. The agreement needs to be signed with the notary. Once the contract is signed, the notary will register the sale in the land register.

Pay taxes and fees

Now the property is officially transferred to your ownership. You will need to pay the property sales tax four weeks later.

Buying a Property in Germany as a non-EU Citizen

If you aren’t from an EU country and currently aren’t residing in Germany, you can still buy real estate there. However, you can’t live there, since you don’t have a residence permit.

Buying a Property in Germany as EU Citizen

As a European citizen, the process of buying a real state in Germany looks the same as for non-EU candidates; the only difference is the possibility of residing in the country and their newly purchased place, as well as the ease of getting a mortgage.

Buying Property in Germany To Rent It Out

Airbnb has become a popular way of making good money out of your property, or even just renting it out for the long term can be very profitable! Can you do it as a foreigner living or even not residing in Germany?

Luckily there is no restriction on renting a house as a foreign national what’s whatever. Also, it doesn’t play a role if they live in Germany or elsewhere.

Consequently, one can buy a property as a foreigner to rent it and make money. However, pay attention to the taxation, since now you will receive more personal income; therefore, some of this percentage might be taxable.

To submit taxes, you can use this convenient online tool for the tax declaration.

To ensure everything is correct and legal, consult a tax adviser using this free platform. It offers different specialists in terms of the law in Germany which will provide you with all the needed information.

Be aware that rental agreements in Germany are pro-tenant, meaning that landlords have strict obligations towards their renters and law overall more on the renter (tenant) side.

Read more about how to be a landlord in Germany.

Knowledge of German When Buying a Haus in Germany

Buying a property is an important decision that involves several people (buyer, owner, notary, and eventually interpreter). For this reason, you should speak German, or the people you are dealing with must know English reasonably.

Despite that, the contract for the property is conducted in German by a German lawyer in any case. A notary must be satisfied with your knowledge of German so that you can understand the essential contents of the purchase contract before the signing.

If the notary sees that you don’t know the language on this level, he will demand an official interpreter at your side during the meeting.

How To Define Your Budget and Financing

This question surely depends on you, how much money you have available, what is the maximum mortgage you can afford and can get, and so on.

Also, your budget will determine where you will be able to purchase a property; for example, in Munich, prices are very high, so not many people can buy a place there.

Mortgages in Germany

The banking system is great in Germany, and even foreigners can get a mortgage if they fulfill all criteria. Overall, getting a loan in Germany isn’t harder than in other countries.

Although, banks in Germany carefully screen potential lenders, for instance, by conducting background checks. Yes, they tend to be quite conservative.

Banks will assess the property’s value, but they will also evaluate you as a borrower. Nonetheless, as long as you fulfill the basic requirements and provide all documents present, you will be fine.

In Germany, paying at least 20% of your house price is recommended as a down payment. Under certain circumstances, paying less than that is possible, or even getting a 100% loan is possible.

Monthly payments shouldn’t exceed 35% of your income. You may have to pay more if the bank considers you a higher risk, e.g., if you are a foreigner or expat.  

Read a detailed guide on how to get a mortgage in Germany as a foreigner.

The main requirements for getting a mortgage in Germany include:

  • You have a valid residence permit with permission to work
  • You are currently working in Germany or have a business in Germany
  • You earn in EUR
  • You can pay a deposit of between 20-30% of the property’s value
  • You can pay related to the purchase costs (up to 15% of the purchase price)

For EU citizens:

If you are an EU national, you can generally expect the same borrowing limits as German citizens (for example, up to 100% of the property value). However, some banks might require a larger upfront deposit.

For non-EU citizens:

All general requirements apply for non-EU nationals with some ads to them. Generally speaking, you are also eligible for all types of mortgages in Germany if meeting the following criteria:

  • You have been employed by a German company for at least 3 months
  • You have finished your probation period
  • You earn at least 1,500 – 2,500 EUR per month

Despite having it all, you will always be at a higher risk for the bank than German and EU nationals. Consequently, not many banks will be willing to lend you money or a large sum.

Those who will consider you as a debtor will require a larger upfront deposit. Luckily, you can improve your chances of getting approved for a mortgage in Germany by getting a permanent residence permit.  

Read more about benefits of PR in Germany here.

For self-employed individuals:

Suppose you are self-employed, for example, a freelancer. In that case, you may find getting approval for a mortgage more challenging, as banks generally consider entrepreneurs and self-employed people to be high-risk investments.

You must prove that you can consistently make repayments. The longer you have been self-employed/entrepreneur, the easier you will get approval from the financial institution in Germany.

The main documents you need to have in order to get a mortgage in Germany:

  • A personal ID, such as a passport, card
  • Copy of residence permit (for non-EU)
  • Adress registration certificate
  • Proof of German pension scheme, such as a social security ID
  • Proof of available equity (confirmation from the bank)
  • Documents about the property (land registry extract, property assessment (if applicable), floor plan, and declaration of division – get these from the owner or real estate agent)

Additional documents for employees:

  • Payslip (Lohnabrechnung) from the last 3 months
  • Salary statement (Lohnsteuerbescheinigung) from last year (get this from the employer)

Additional documents for freelancers & self-employed

  • Two most recent tax returns
  • Two most recent tax assessments (Steuerbescheid) from the German tax office
  • Profit and loss account for the previous year, verified by your accountant

After you have provided all the papers, the bank will decide whether to give you a loan or not. If several banks refuse you, it might make sense to try to loan money in your home country.

Interest rate in Germany

The interest rate of your mortgage will depend on the amount of your down payment and also the duration of your mortgage. The interest rate at the moment is very low (between 1-2%).

The duration of your mortgage depends on the amount of your loan and your annual repayment. A mortgage period in Germany usually lasts for 25 or 30 years. 

In many cases, the interest rate is fixed for the first 10 years. Afterward, you have to make a new loan contract based on the current conditions and situation.

Read how to buy an apartment in Munich.

Costs of Purchasing a Property in Germany

How much will it cost you to buy a home in Germany? This cost includes the purchase price and other related expenses you need to consider.

The cost of buying a house in Germany varies greatly depending on the region and city. House prices have increased rapidly in the past 10 years, especially in big cities.

At the moment, Munich remains to be the most expensive place and probably will be in the future. In addition to the house prices, rents keep increasing yearly.

Check out current house prices in Germany.

Costs of buying a property in Germany include:

  • 20% deposit
  • estate agents’ fees 3-7% plus 19% VAT
  • notary 2%
  • property transfer tax 3,5 and 6,5%
  • translation costs

If you decide to sell your house before owning it for ten years, you are susceptible to a capital gains tax of 25%. All mentioned above costs don’t depend on your nationality either; German will pay the same price.

Tax Adviser

I would highly recommend you to get professional advice when it comes to renting a property and also selling it. Also, it will help you understand everything you need regarding the loan or the mortgage. You can use a platform like Yourxpert.de to get a free online assessment from a tax adviser and book one eventually.

Notary and Registration fees

Once you find your dream property and agree with the seller, you must sign a contract. There is no way to purchase a house or apartment without the involvement of the layer (notary); therefore, their fee will be your other expense.

The notary is responsible for preparing the contract, checking the land register to ensure the property you have chosen can be sold, and if there is any restriction on its use. For example, the seller should not owe any property taxes. 

It will cost around 2-3% of the property purchase price to pay for the notary and registration fee. Firstly, you can pay the notary fee and later the price of the house, so you don’t purchase something that can’t even be sold.

Once everything is checked, the notary will enter the property into the land register. The change of ownership can only happen after this entry has been made. Also, make sure you have a mortgage fixed before signing the contract at the notary.

The notary must also ensure you understand the German purchase contract before signing it. Therefore, if your German is insufficient, you must bring an interpreter to a meeting.

In that case, you will also need to consider the interpreter’s fee.

Use Yourxpert to get a free assessment from a tax adviser. It’s essential to understand all the tax aspects when investing in property in Germany.

Real Estate Agent’s Fee

We all can agree that it’s challenging to find the right property for purchase; the process takes time and energy. If you don’t have both, you might want to request help from a professional real estate agent, which is quite common in Germany.

The agent fee for arranging a house for you are usually 6% of the property price plus taxes (a total of 7.14%). Although, this cost can range from 1,5% to 7%, depending on how the commission is split between the buyer and the seller. Additionally, you will pay 19% VAT.

Once you agree to buy the property, your agent will arrange a notary contract between you and the seller. You will have to pay the agent’s fee after completing the contract.

Interpreter

If your German language skills are lacking to complete the procedure, you will be required to hire a translator for the contract and the entries in the register; only in this way can the contract be recognized.

Taxes

In Germany, nothing happens without the tax. The government-regulated property tax ranges between 3.5% and 6,5% of the purchase price and must be paid by the buyer after signing the contract. The amount varies depending on the state.

If a property costs less than 2,500 EUR (which never happens in Germany), you will be exempt from this expense.

If, in addition to the real estate, you are buying land, the costs for the land registry will be added to this tax. They vary depending on the value of the property.

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Anna

Anna is an enthusiastic expatriate with experience of living in Germany, Austria and Greece. She shares her passion for living abroad on this website.

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