Welcome to the German property market: A guide for foreign investors

The German property market is open to both private individuals and companies from all over the world. Regardless of nationality or place of residence, international buyers can acquire property in Germany without any additional bureaucratic hurdles. Interested parties from outside the European Union are also welcome to invest in the German property market. Germany’s political stability and transparent legal framework make the market particularly attractive for foreign investors.

How is property purchased in Germany?

The acquisition of a property in Germany is strictly regulated and requires compliance with specific legal and formal requirements. The most important steps are explained below.

1. the notarised purchase agreement

In order to legally conclude a property purchase agreement in Germany, it must be notarised before a notary. The notary ensures that both parties fully understand the contract and that all legal requirements are met. As notaries must remain neutral, it is advisable to seek additional advice from a lawyer to ensure that your own interests and individual questions are fully clarified.

2. the land register entry

Ownership is only formally transferred when the buyer is entered in the land register. This register ensures that buyers actually acquire the property from the rightful owner, thus creating transparency and legal certainty for both parties. The entry in the land register ensures that every buyer receives the exact right to the property they have purchased.

3. taxes when buying a property

Real estate transfer tax is payable prior to the final acquisition of ownership. Depending on the federal state, the amount varies between 3.5% and 6.5% of the purchase price. Real estate transfer tax is a one-off tax that must be paid before the transfer of ownership.

Additional responsibility of the buyer

Despite the uncomplicated access for foreign investors, certain aspects must be considered particularly carefully. Buyers bear a high level of responsibility when examining the property, particularly with regard to

• Third-party rights: Are there any encumbrances or claims by other parties?
• Contaminated sites: Is there any environmental pollution or other contaminated sites on the property?
• Buildability: Is the desired use of the property legally permissible?
• Official requirements: Are there any regulations or restrictions that could affect the construction project?

It is advisable to check these points thoroughly in order to avoid unpleasant surprises and realise the full potential of the property.

Our assessment

Despite the generally unrestricted access to the German property market, it is highly recommended that international investors seek tax and legal advice from an experienced expert before making a purchase. This not only helps to correctly fulfil the legal requirements, but also to comprehensively clarify all financial and tax aspects.

Conclusion: The German property market offers attractive investment opportunities for foreign buyers thanks to its stability and clear legal structure. If you follow the necessary steps and take personal responsibility for checking all property conditions, you can invest safely and successfully in the German property market.

Useful links

Here are useful links from public institutions in Germany that are relevant for prospective property buyers:

1. Housing and Building Regulations
   Bundesinstitut für Bau-, Stadt- und Raumforschung (BBSR) – Information on housing policy, subsidies, and building regulations for properties in Germany
2. Taxes and Financial Matters
   Bundeszentralamt für Steuern (Federal Central Tax Office) – Details on property taxes and tax obligations in Germany.
3. Visas and Residence Permits
   Auswärtiges Amt (Federal Foreign Office) – Information on visas and residence permits for property buyers in Germany.
4. National Statistics
   Statistisches Bundesamt (Federal Statistical Office) – Access to market analyses and statistics on property prices and demographic data.
5. Environment and Construction Regulations
   Umweltbundesamt (Federal Environment Agency) – Information on environmental regulations and construction guidelines in sensitive areas.

These links provide essential legal, tax, and building regulation information and facilitate access to key governmental resources for property acquisition in Germany.