Can Foreigners Buy Land in Germany?

Living in Germany, Housing

Do you want to invest in property in Germany and buy land? Purchasing land can be a great investment if you want to build a house in Germany and settle for a longer time. In fact, I know several people who actually build their homes from scratch instead of buying a finished product.

Foreigners have all legal rights to buy land in Germany, similar to German citizens. There are no bans or rules discriminating against foreigners in buying land or real estate in Germany. A free movement of capital introduced in 2004 allows EU and non-EU citizens to make real estate investments in the EU.

EU and non-EU citizens can buy land in Germany and use it for many purposes. However, they need to consider several rules and regulations applicable for all developments in the country. In this article, you will learn about the process of buying land in Germany.

Buy Land in Germany as a Foreign Citizen

Of course, there are no bans or rules discriminating against foreigners in buying land or real estate in Germany. All thanks to the European free movement of capital. As a result, all restrictions on capital movements and payments for EU and non-EU citizens have been prohibited since the 2004.

Thus real estate and the land market are open to you. Check another article about buying real estate in Germany as a foreigner. But If you want to build a house in Germany, you need a plot of land first.

However, this process can be a little complex and take a long time – even weeks and months. Thus, the search for the right plot of land is difficult, especially if you are looking for a particular location and within the city. After finding the potential piece of land it must be followed by an examination process.

Things To Know Before Starting the Seach

A foreigner without previous experience in real estate in Germany must know several things before even looking for a plot.

Private or Agency?

In Germany, you have the opportunity to buy a plot through a real estate agent or from the owner. Both options have advantages and disadvantages, so let’s look at them.

Private Seller

Buying a land or building plot from a private seller or an owner is often cheaper, as you don’t need to pay brokerage fees. However, private sellers often aren’t competent enough to answer the questions about regulations and land in particular.

Real Estate Agent

If you decite to use the services of the realtor, you will get all your questions answered. This information will be legit and reliable. Furthermore, they will help you with the land search, when with private sellers you need to invest time to find a suitable plot yourself.

Moreover, you will receive documents confirming all that they state, especially important when looking for land to build a house. Thus, the purchase with the broker will be more secure and official than with the private seller. Their fee is usually calculated at 3,5% to 5% of the land price.

The Location

The location you want the potential land to be is very important. It also reflects the price and time you invest in the search.

Firstly, forget about the city centers or even highly populated districts of cities. You barely will see a plot there, and if it’s gonna be expensive as hell. It makes sense to look in smaller cities and municipalities around the bigger cities.

Indeed, the highest chance of getting a good deal will be somewhere in the village or even in the middle of nowhere but the nearest city can be still reachable. However, out of convenience, 30-40 minutes of driving to the city center is generally a good location to search for cheaper land.

If you want to live near a big city like Munich or Hamburg, search for a plot in the land area, it called “Landkreis”. You can select a desirable distance from the city. The cost per square meter will be much lower in these regions than closer to the city.

Is Land a Good Investment in Germany?

Land definitely can be a good investment in Germany if you pay attention to the details and select the plot carefully. However, buying land in Germany especially makes sense if you want to build a house afterward. To determine if buying the plot worth investing your money, look at the following:

  • Location

The location of the land is by far the most important thing. For example the area, region, city, neighborhood well and look for pitfalls. Places where people actively leaving and moving out must be avoided.

  • Development

Examine what is allowed to build on this land and what isn’t, do they have planning permission. Only those are suitable for investment.

  • Land register

A look into the land register reveals whether the property still has mortgages or other non-positive sides of it. For instance, you can see all imposed restrictions and issues there.

Overall land is a stable investment in Germany, it keeps appreciating since people have less and less space to live. Especially worthwhile plots in cities with positive economic development and in a very good location.

When the time to sell/rent your land or house comes, you can take advantage of ohne-makler.de platform – German’s biggest website to sell & rent out the land, house, apartment, or other property without agencies and brokerages. Your listing will be posted on all other (big and small) real estate platforms completely automatically. Hence, an ad will be published everywhere within just one posting. Read reviews about the company here. Only by renting or selling your property, you will get your investments back.

Buy Land in Germany: Step by Step

How should you go about buying land in Germany? Here are steps one needs to follow in order to get a good deal. Pay attention to the validating process of the property and local regulations.

Finding a Suitable Plot

In Germany, properties can be found through the internet, agencies, or even local newspapers. It will take time, the more search criteria you have, the longer it may take to find a building plot that meets the requirements. You can apply several methods when looking for available land:

  • Ask the municipality in which areas of the city the free pieces of land are available
  • Search on the real estate websites
  • Contact the major construction companies in the region. They often buy land to build houses on.
  • Walkthrough the areas you would like to build a house and look out for vacant plots

Find a provision free land

If you don’t want to work with brokers “maklers” in Germany, you should look for provision-free land. Look out for the following terms to avoid brokerage fees:

  • provisionsfrei grundstück kaufen
  • grundstück ohne makler kaufen
  • grundstück von privat kaufen

In Germany, there is a large platform to find land and houses without the provision – from the owner, called ohne-makler.net. They collect all ads around the internet on this one site.

Identify Value of The Plot

After you have found a quite suitable piece of land you want to understand if it worth the money. Because it’s not always clear if the price of the plot is reasonable.

The best thing to do is to see several plots in the same and different areas for later comparison. However, there are other factors that are affecting the value of the land including:

  • Buildability of the plot (taking into account possible development plan and plot form)
  • Degree of development (gas, water, sewage, electricity)
  • Location and surroundings (local supply, infrastructure)
  • Soil conditions

Things to Consider Before Buying a Plot in Germany

Now you have found the plot but there are many other things to know and to consider before making a final decision and moving on to the deal. For instance:

  • Which buildings are allowed on this land? What exactly is in the development plan?
  • What is the soil condition? Is a soil exchange necessary? – this can be very expensive
  • How much will cost the basement?
  • How is access to the land regulated?
  • Is the property fully developed or there are some additional investments needed?

Location

Again the location of the land is so important, after the purchase you can’t change it only sell. A buyer should pay attention especially to the reachability of the plot from the nearest cities and infrastructure in the area.

Are there daily shopping facilities, schools or doctors nearby or do you have to travel 40 min to reach them? Is there a busy highway nearby or land in the proximity of an airport?

Moreover, look at the quality of the land and where particularly its located regarding the landscape. For example, plots on slopes or proximity to the water aren’t that optimal for building the house.

Look into the land register

Before singing the contract a land buyer must check a land register (Grundbuch) for any additional information that wasn’t shared.

There you can see the owner of the plot, but also if the land has any mortgage or claims of third parties, and which rights are registered. Such rights can significantly restrict building intentions.

Review if land is suitable for building

Most importantly before buying land you want to know if it’s allowed for building and which construction types are permitted. These rules are called local development regulations. For instance, in some areas, only agricultural and forestry developments are authorized.

There is no use of the land in Germany if you can’t build on it, or at least not according to your own plans. Therefore, a plot must have a development plan.

Examine local planning permissions

A development plan (Bebauungsplan) includes all information about types of houses and rules for consturctions.

Additional details on buildings will also be in the plan, such as the maximum size of the house, levels, the roof shape, and type, the facade design, etc. If you want to make sure your planned house is permitted to build on this plot, you can submit a detailed construction plan to the state.

Size of the plot

The size of the plot will also affect your decision whether to buy the land or to continue searching. The size of the plot determines how big your house will be and if all planned constructions will fit or not. Consider which size your future home should have and whether you want to have a garage, a garden, etc.

Development of the plot

Basically, it is recommended that you buy a property that is already developed will all infrastructure you need. It includes lines for energy, water, wastewater, telephone, and internet networks, thus you can start to build a house without additional investments.

If the property is not yet developed, it will of course cheaper, but you will be responsible for development costs.

Financing and Mortgages in Germany

Before starting the land search you should define the available budget and which financing options you have in Germany. The entire budget consists of your available equity and the maximum credit limit.

Firstly a buyer in Germany must secure the mortgage and only after sign a purchase contract for the land. For foreign residents credit options and conditions might be different, thus, the questions of finances must be sorted before everything else.

The first thing you need to do is find out how much you can borrow in Germany. You should visit several banks in person. Mortgage lenders tend to be quite conservative. In the process, they will assess you as a borrower and the value of the land.

Therefore, a buyer must have consistent income and a good financial standpoint. Monthly expenses also will be considered. Be aware, that any debts and loans will be counted in the total debt.

A borrower can expect to pay 20% of the land price out of the savings, and the rest will be the mortgage. Monthly payments for credit shouldn’t exceed 35% of the total income.  

Land’s Purchasing Process in Germany

The purchase of land in Germany happens in basically takes place in three steps:

  • Agree on the price with the owner
  • Secure financing
  • Meet with a notary & owner and sign the contract

Before signing you must check the purchase contract. Two weeks before the final purchase the notary will hand you a preliminary purchase contract. In this contract, a buyer can find information about the size, location, and price of the land. It also records whether there are buildings on the plot.

If the information in this document matches with what you have seen and expected, a formal purchase contract will be conducted.

Get Your Land & House Insured

After you have bought your land its time to get all insurances in order. Firstly a land owner needs to get a liability insurance for home and landowners (Haus- und Grund­be­sit­zer­haft­pflicht). This will protect you from all incidents and disasters which can happen on your land or in the house.

A liability insurance protects you as a house and property owner from possible claims for damages. You can choose between the low-cost basic and the extended comfort protection, which ranges from 10 to 50 million EUR in coverage.

The second helpful insurance is liability insurance for building the house (Bauher­ren­haft­pflicht). It will protect you against all claims for damages during the construction period. Insurance will cover 10 million EUR for personal, property and financial losses.

Most Common Mistakes To Avoid When Buying a Land

Buying land in Germany is a significant decision in your life, which must be taken with all responsibility and concerns. There are some common mistakes which you should avoid when selecting, inspecting, and purchasing the land.

The first common mistake is to underestimate the later construction costs. In most cases, people are buying the land to build a house, therefore, they must calculate the costs of both. More than often buyers overlook how much financing they need to buy a plot and build a house with all necessities in it. Hence, determine your budget and set up the financing first.

Do you have enough money for house construction according to the planned project? The practice has shown that a new building is always more expensive than you think.

The second mistake is overpaying for the plot or value estimation was wrong. You need to do the research and see several options in the area to estimate prices.

Another mistake is with the misfortune with the location selection. Check all details about the area, all that concerns you including connection to the public transport network, schools, shops, doctors, etc.

The last mistake which land buyers make is not requesting or not checking properly official information about the land. Make sure to read throughout the development plan (Bebauungsplan), and the land register (Grundbuch).

Recommended products and services in Germany:

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