Property buying guide for Germany
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Buying property in Germany

2–3 months

Purchasing process duration


Transaction costs

1,5–2% p.a.

Mortgage rate

In Germany, foreign nationals can buy real estate of all types — land plots, residential and commercial properties — without limits. Germany is a seller’s market, so owners typically dictate the sales terms, and buyers pay agent (realtor) fees.

Transaction costs

Major costs (proportion of purchase price)
Purchase tax 3,5–6,5%
Notary fee 1–1,5%
Agent fee 3,6–7,1%
Property registration fee 0,8–1,2%
Total: 10–15%
Extra costs
Independent property appraisal
before mortgage
Mortgage arrangement fee 1% of the loan amount
Legal entity registration €1,000
Due Diligence 0,5–1,5% of the property value
Trust account fee 0,25% of the property value
Total: 1,75–2,75% + €2,000–3,000

This article describes the typical process for buying property in Germany. Details of the procedure and the order of stages may vary between transactions.

1. Choosing the property

The buyer decides on the purpose of the purchase, real estate type, budget and contacts an agent in Germany. They sign a brokerage agreement, which obliges the client to pay the agent's fee (3–7% of the real estate value, inc. VAT) at the time of purchase. The client chooses a real estate from what the agent offers.

Buying property in Germany
In metropolitan cities, buyers have to make decisions quickly, as high-quality properties are in demand and often sell within a couple of weeks. Photo: Christian Wolf / Wikimedia

At this stage, the buyer usually decides whether to register the purchase to an individual or a legal entity. This affects the rental income tax rate if the real estate is going to be leased. For individuals, the tax is calculated at a progressive rate ranging from 14,77% to 47,475% (including the solidarity surcharge), while for legal entities the rate is fixed at 15,825% (on condition that real estate leasing is the only commercial activity performed by the legal entity). Company registration takes 2 to 4 weeks and costs €2,000-3,000, and administrative fees range from €300–400 per month.

Can a buyer purchase a property from outside Germany?

The buyer’s presence is only required for two procedures: opening a bank account and registering a legal entity. For the other stages of choosing and buying property in Germany, power of attorney can be given to his representative in country.

2. Reserving the property

After choosing a property, the buyer signs a reservation agreement with the agent. Under this agreement, the agent books the property for the time needed to draw up the sales agreement and conduct other preparations. As a rule, when signing the agreement, the buyer makes a down payment of 10% of the property price.

In transactions involving commercial real estate, both parties also sign a letter of intent (LOI), which includes key transaction terms and the closing date. Usually, the client does not pay a deposit and has no financial obligations to the seller when signing a LOI.

Sofia Bulanova Sofia Bulanova Investment consultant
Ask Sofia a question

At this stage, the buyer opens a current account with a German bank to pay for the purchase. The same account can be used to pay taxes, utility bills, compensate for accounting services and receive rent in the future. If the client takes out a mortgage, the account is usually opened with the bank that issues the loan.

To open an account, the buyer provides a CV, passport and documents proving the legal origin of funds. Banks are obliged to perform customer due diligence as required by the Know Your Customer (KYC) regulation aimed at preventing money laundering and financing criminal activity. Opening a bank account usually takes 5 to 7 days, though in some cases KYC take several weeks to complete.

3. Preparatory actions

As a rule, before purchasing expensive property in Germany, especially commercial real estate, buyers order a comprehensive due diligence. It may include a technical audit, legal review, tax analysis and transaction risk assessment. Due diligence takes about 1 month and costs 0,5–1,5% of the property price, depending on the property's features.

A mortgage increases property yields, as the value of borrowed funds is lower than the rental revenue.
A mortgage increases property yields, as the value of borrowed funds is lower than the rental revenue Photo: tupungato / Depositphotos

At the same time, the buyer applies for a mortgage if necessary. Depending on the property value and the bank's terms and conditions, non-residents can get 40–70% LTV loans at 1,5–2% per annum in Germany. The average loan term is 15 to 20 years.

Mortgages in Germany are a cheap way for rental property owners to substitute some part of investment, increase ROI and reduce the income tax payable. Loan payments are deducted from their incomes, reducing the tax basis.

Julia Morozova Julia Morozova Senior investment consultant
Ask Julia a question

Before issuing a mortgage, lending banks require their clients to get an independent certified appraisal to assess the property’s liquidity and risks. This appraisal is an extra quality guarantee for the client and costs €1,000 to €2,000 on average. Mortgage costs comprise about 1% of the loan amount and are paid by the buyer upon the issuance of a loan.

4. Signing the agreement

To formalise the transaction, the buyer and the seller hire a notary, who draws up the sales agreement and negotiates details of the transaction with both parties.

Who chooses the notary?

Usually, it is the buyer, as the buyer pays the notary fee. In Germany, notaries are independent contractors and represent state bodies.

Along with other details, the notary checks the land register (Grundbuch) for the previous and current owners of the property, any outstanding restrictions, mortgage and third-party encumbrances.

The notary is responsible for the part of the transaction related to the land register records
The notary is responsible for the part of the transaction related to the land register records Photo: BrunoWeltmann / Depositphotos

The notary drafts the final agreement in German and specifies the contract date as soon as all the clauses have been agreed upon. The buyer and the seller sign the agreement in the notary’s presence.

5. Registering and paying for the transaction

Once the agreement is signed, the notary places a new preliminary property ownership record on the land register. The buyer pays the remaining property costs. Depending on the agreement terms, the money is either transferred directly to the seller or through a trust account (typically in major transactions).

If there is a mortgage encumbrance on the property, the notary usually arranges the mortgage to be removed by the seller's bank on condition of repaying the debt. In this case, the buyer transfers the required amount to the bank and the seller receives the remaining sum.

After payment, the buyer receives the keys and becomes the economic owner of the property, and is entitled to use it or rent it out. The buyer pays the transfer tax, as well as agent, notary and registration fees, which in Germany typically comprise 10–15% of the property value.

Once the seller acknowledges the receipt of funds and tax authorities in Germany verify the payment of tax, the notary lodges a request to place a definite record on the land register. On the grounds of this record, the transaction is considered closed and the buyer becomes the legal owner of the property in Germany.

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