How to buy real estate in Germany: a step-by-step guide for foreigners

The possibility of purchasing real estate in Germany

The question of the possibility of purchasing real estate in Germany attracts the attention of not only local residents but also foreign citizens. Many foreigners are interested in whether they can buy property in this country. The answer to this question is affirmative: foreigners can acquire residential and commercial property under the same conditions as German citizens.

This is because the country's legislation does not impose any restrictions on the selection and location of real estate. This is significantly different from countries like Austria and Switzerland, where foreign buyers need to obtain special permits for transactions.

Documents for purchasing real estate

To successfully complete a real estate purchase in Germany, the applicant needs to gather a specific set of documents. The most important element in this process is a foreign passport. It is also recommended to provide a bank statement that can confirm the availability of funds in the account and demonstrate the buyer's serious intentions.

In recent years, there has been an increasing demand for documented proof of income sources, which is related to the requirements set forth by anti-corruption legislation.

Challenges in the real estate market for Russians and Belarusians

Despite the challenges faced by Russians and Belarusians in the real estate market in Germany and other European countries, it is quite possible to make a purchase if certain conditions are met. Holders of a residence permit in Germany, or even better, a permanent residence permit in one of the EU countries, have a wider range of options.

• Access to translationsto a German bank account;
• Getting loansin local financial institutions;
• Investmentsin various financial instruments, including real estate purchases.

Acquiring real estate without permanent residence in the EU

Furthermore, if a foreign citizen does not have a permanent residence in Europe but has opened a bank account that allows transactions, and there are sufficient funds in that account to make a purchase, they can also buy both residential and commercial real estate in Germany. However, it is important to remember that those who are not under sanctions can freely manage their funds.

Nevertheless, it is worth considering that transferring money can be a complicated task, as there are limits within the EU jurisdiction for citizens of Russia and Belarus, capping the amount at no more than 100,000 euros. This amount is usually insufficient for a full-fledged transaction, especially in cities like Munich, where the price of apartments starts at 300,000 euros. In the Düsseldorf area, you can only purchase a small apartment for a similar price.

Problems with opening bank accounts

Another important detail is that many credit institutions in Germany refuse to open accounts for citizens of Russia and Belarus. The reason for this lies in the labor-intensive and lengthy process of verifying the origin of funds, which banks seek to avoid in order to reduce their financial risks.

For this reason, finding a suitable apartment building or other real estate in Germany can become a serious task that requires persistence and a good understanding of all the nuances of the current legislation.

Conclusion

Therefore, before making a purchasing decision, it is crucial to consider both financial risks and legal aspects, as well as the procedures that will be followed for the transactions. The importance of thorough preparation and awareness of all aspects cannot be overstated, as it will help avoid many problems during the process of acquiring real estate.

Lack of a mandatory bank account

Having an account in a German bank is not mandatory for real estate transactions. While transfers can be made from other countries, it is important to emphasize that not all developers are willing to accept such conditions. Russian and Belarusian buyers often choose to open accounts in countries like Turkey, Georgia, and Kazakhstan. Transfers from Russia to accounts of individuals or organizations located in countries classified as "unfriendly," including Germany, are not possible.

Features for CIS citizens

Citizens of Georgia, Kazakhstan, Armenia, Azerbaijan, and other post-Soviet republics, except for Russia and Belarus, do not face restrictions when opening bank accounts and transferring funds from abroad. However, it is important to remember the necessity of confirming the legality of the origin of their funds. As for Ukrainians, they can also open accounts and conduct real estate transactions, but they may encounter difficulties when trying to withdraw funds from Ukrainian banks. In cases involving cash currency, such funds must be declared when crossing borders.

Stages of buying real estate in Germany

The process of purchasing an apartment or house in Germany can be conditionally divided into several stages:

• First step:It includes gathering a sufficient amount in the account. Clients from Russia and Belarus are advised to transfer funds to an account in one of the foreign banks in advance, usually in countries with a positive attitude.
• Second stage:Choosing real estate. Taking into account the client's preferences, the agency prepares an "exposé" — documents with several options for apartments or houses. Realtors will coordinate dates for viewing the selected properties and arrange them with the sellers or developers.
• Third step:The process of booking real estate. After the client decides to purchase a specific apartment or house, they will need to sign a preliminary contract or reservation agreement and make a deposit. Typically, the deposit amount ranges from 1,000 euros to 1% of the property's value, depending on the terms set by the developer or owner. Next, a date is set for signing the main sales contract with a notary, which usually occurs 2-4 weeks after the broker's reservation.
• Fourth stage:Signing the contract. At the time of the transaction, the seller or their authorized representative, the buyer or their trusted person, as well as realtors, are present.

The process of completing a real estate purchase and sale transaction in Germany

The procedure for acquiring real estate in Germany involves a number of key steps and can take from one to two hours, depending on the specifics of the particular transaction. The first step is the preparation of a significant amount of documentation — at least 17 pages are required to complete all formalities and registration.

Notification of various authorities

When both parties have signed the sales contract, the notary is required to inform various government agencies about the new registration of the property owner. These organizations include:

• land cadastre;
• court;
• tax service;
• local government;
• utility services;
• the bank, if the property was purchased with a mortgage loan.

A preliminary entry about the new owner is made in the land registry, which excludes the possibility of selling the property without prior notification.

Notification to the buyer about the payment made

After the notary receives confirmation from all the mentioned authorities, he notifies the buyer about the need to make the payment for the purchase. The information contained in this notice may pertain to the payments that should be transferred to:

• notary's bank account;
• seller's account;
• a special trust account where the mortgage was arranged.

It should be noted that with2022In Germany, there are legal restrictions that prohibit cash payments and the use of cryptocurrency in real estate transactions.

Taxes and payments

Depending on the cost of the property being purchased, the buyer is required to pay a property acquisition tax, which varies from3.5%to6.5%depending on the region. For example:

• In Berlin, this tax reaches6%;
• In Bavaria, its magnitude is3.5%.

After the tax is paid, the tax authority issues a certificate confirming that there are no obstacles to registering the new owner in the court register (the so-called unbedenklichkeitsbescheinigung).

Final registration

As soon as the full amount is paid, the notary receives the authority to finalize the registration of the new owner in the land registry. The certificate obtained from the tax service is submitted to the court, which issues an invoice for the registration. Once this is paid, the new name will become part of the registry data, officially confirming the buyer's ownership rights to the property in the country.

Time for processing and issuing

From the moment the buyer first inspects the property to the completion of the registration process in the land cadastre, about2-3 monthsThere is also the possibility to obtain an extract from the land registry to confirm property rights. This extract can be certified by a notary or a representative of the local court upon the personal request of the new owner.

Additional expenses when purchasing real estate

When purchasing real estate, you may encounter various taxes and additional expenses:

• The one-time property acquisition tax (grunderwerbsteuer) amounts to3.5%to6.5%from the purchase price.
• An annual property tax (grundsteuer) is levied, which is paid to the local authorities.

All of the above aspects are important to consider when planning to purchase real estate in Germany.

Property tax in Germany

In Germany, the property tax, known as Grundsteuer, varies from region to region. The tax rate can range from 0.26% to 1% of the assessed value of a building or plot of land, while the average rate is usually around 0.35%.

The process of determining the final tax amount depends on various factors. These factors include:

• property type;
• her location;
• area of the plot;
• real estate appraisal;
• year of construction of the object.

Additional expenses when purchasing real estate

When communicating about purchasing a home, whether it's an apartment or a house, immigrants in Germany should consider the additional costs associated with the transaction. Among these expenses, the following can be highlighted:

• Registration fee– about 0.5% of the cost of the purchased property;
• Fee for processing the transactionin the land register (Grundbuch);
• Notary feesNotary fees – from 1% to 1.5% of the property's price;
• Commission of real estate agenciesBroker's commission – from 3% to 6% of the value.

** "The role of a notary"

Regarding the safety of real estate transactions in Germany, the notary acts as a neutral intermediary who is responsible for ensuring the legality of the entire process and protecting the rights of both the buyer and the seller. Before signing the purchase agreement, the notary checks all documents related to property rights and conducts an analysis of data from the land register to identify any possible encumbrances.

It is important to note that in most cases, additional legal checks are not necessary.

Mortgage lending and installment payments

Regarding mortgage lending and installment payments, purchasing an apartment in the primary market often implies the possibility of paying in installments. Typically, the process of selling new developments begins at the foundation-laying stage, which occurs about 1.5 to 2 years before the complete construction of the property is finished.

In such situations, payments are made in stages depending on the progress of the work by the developer. However, when purchasing already completed real estate, the full amount must be paid upfront.

Availability of mortgage loans for foreign citizens

For foreign citizens, except for citizens of the Russian Federation and Belarus, the opportunity to obtain a mortgage loan in Germany remains available. It is recommended to contact a real estateagency that can offer competitive lending conditions.

As of today, the average interest rate on mortgage loans is approximately4.5%, while in the past2022In the year, it increased almost threefold.

Citizens of Russia and Belarus are facing restrictions in accessing housing loans. In some cases, it may be necessary to conduct a transaction remotely. If a potential buyer is unable to travel to Germany for personal participation in the deal, realtors offer online tours to select suitable properties and address all organizational matters.

The process of signing a contract

If the buyer cannot be present during the contract signing process at the notary, they need to preparegeneral power of attorneyfor your agent, lawyer, or trusted representative. This will significantly simplify the transaction and ensure the legal clarity of all procedures related to the purchase of real estate.

Conclusion

In conclusion, purchasing real estate in Germany for foreign citizens is not only the realization of a lifelong dream but also a rather complex process that requires careful preparation and knowledge of the key nuances. Despite the existing challenges that Russians and Belarusians may face, it is important to understand that opportunities for acquiring housing are still available.

I shared with you the key stages, starting from the initial accumulation phase to the final signing of the contract at the notary. Each step, from choosing the property to securing financing, requires attention and a serious approach.

Key stages of purchasing real estate

• Accumulation of funds:Transfer funds to the account in a foreign bank in advance.
• Site Selection:Work with the agency to create a list of suitable options.
• Booking:Sign the preliminary contract and make the deposit.
• Contract Signing:Make sure the notary reads all the points of the contract.

It is important to note that having a residence permit or an account in a European bank can significantly simplify the process. However, even without these conditions, with the right actions, the likelihood of a successful transaction remains.

I hope that by reading this article, you were able to gain useful information that will help you achieve your dream of owning a home in Germany.

Moreover, don't forget that working with experienced professionals, such as realtors and lawyers, will help minimize risks and simplify the process. It's important to carefully work through all the details at every stage, as even a small mistake can end up costing significantly more.

Good luck!

I sincerely hope that with all the knowledge shared, each of you will find your perfect home or apartment in this beautiful and stable country. The process of buying real estate, despite its challenges, remains quite achievable if approached with wisdom and caution.