For members


It’s not that hard: the beginner’s guide to buying a home in Germany

One of the strongest signs which show that expats are keen on planting roots in Germany is purchasing a home here. It’s not as scary or time-consuming as you might think, and in the end could save you a lot of energy and euros.

It's not that hard: the beginner's guide to buying a home in Germany
Photo: DPA

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In Germany, nearly 50 percent of people rent a home rather than buy one, much lower than the EU average of 70 percent, according to Günter Fischer, the managing director of Engel & Völkers, a Berlin-based real estate consultancy. In Berlin, it’s an even higher number: 70 percent of residents rent a home versus 30 percent who buy one.

This is attributed largely to strong legal protections for renters, rent control laws in many German cities, and the lack of special benefits for buyers. Unlike in some European countries such as Spain, one cannot deduct the cost of one's mortgage payments from taxes in Germany.

It’s also due to available new units: home-building boomed in the 1950s and 1960s due to a post-war tax which subsidized their construction. But new building of homes significantly slowed down in the years that followed, despite the fact that Germany has far less living space than other countries.

Germany, for example, has one-ninth the living area that the US has. Even in the suburbs of many cities, new developments are largely limited to connected townhouses, meaning that a person might have to walk a sizeable distance to park their car in an underground garage.

Prices are rising, but there’s hope

In large cities such as Berlin, ubiquitous construction cranes may paint a picture that housing is being built non-stop. But there’s still a shortage of supply to keep up with demand, as Germany currently lacks one million housing units, according to a January 2018 Deutsche Bank study.

This lack of availability means that home and apartment prices have grown by 80 percent in major cities such as Hamburg, Berlin and Munich from 2009 to 2017.

But housing developers have taken note, leading to another building upsurge right now: in 2017, the number of newly completed residential units rose to more than 300,000 for the first time in the current cycle, and by the end of 2018, it is expected to climb to 335,000.


Yet as demand remains high, prices will also continue on an upward spiral, making now a good time to buy in most cities, when still low interest rates can be locked into the purchase price of the home, according to Fischer. He dismissed worries about a potential bubble, pointing to the stable Hypothek (mortgage) market that has seen little growth in the past 17 years, and a steady supply of new homes being built.

Photo: DPA

When you should buy a home

Upon arriving in Germany four years ago, James Poisso and his wife Jen Multari thought it would simply be easier to rent, even though they planned to stay in the Wiesbaden area with their two children for an indefinite amount of time. Yet they quickly saw that was not the case when, a year after finally feeling settled in their home, their landlord contacted them, saying he would reclaim the home with his family in three months.

While the family was able to extend their move-out date, they quickly began searching for a new home, but decided that – going forward – it would be far easier to buy rather than rent, despite the initial extra efforts picking a home would cost.

They first turned to real estate websites, as they were accustomed to doing in the US but often were not contacted by an agent, or they were told that the property was no longer available.

At the few home viewings offered to them, they saw older properties that required a lot of work – in Germany, it’s typical that a person “constructs” their home to their liking, from the bathroom to the kitchen, after purchasing it.

Frustrated by the options, they turned to a local Facebook group and found another American expat family who were selling their home. They avoided the six to seven percent tax that is usually spent on an Immobilienmakler, or real estate agent, and purchased the home – a rare airy house with 3.5 bedrooms and a large yard for their children.

According to Fischer, for expats who plan to stay in Germany longer than four years, it can be a more sound decision to buy rather than rent. If you plan to stay in Germany for less than a decade, it might be wiser to rent.

A capital gains tax (Begeltungsteuer) of 25 percent applies to any home purchased and sold in less than 10 years, yet expats can continue to rent out their homes if they do move before that time. They should take note, however, that property management companies are not as common in Germany as they are in some other countries such as the US and Canada.

Where to buy

In Germany, the three factors which most strongly influence the price of a home are “location, location and location,” said Fischer. He pointed to identical apartment units being sold only blocks away, one in the centre of Potsdamer Platz in Berlin and another on a side street.

The costs went down by at least 30 percent by simply shifting to a less central location. In cities, he says, housing units located next to public transportation hubs tend to have the highest prices, with the costs decreasing based on the travel time to the nearest U-Bahn or S-Bahn station.

In addition to being located close to good public transportation, families should look at the distance it takes to reach schools, their place of employment and recreational facilities. If in an area lacking good bus or train connections, they should ask themselves whether using a car or bicycle can compensate for the inconvenience.

Photo: DPA

Keeping your credit in check

Normally a person is required to show their prior credit through a German credit check called a SHUFA, says Fischer, which many expats arriving in Germany don’t yet have. But even more important, he says, is capital already in the bank. A person should be able to put down 20 percent on a house, plus additional costs (Nebenskosten). If these conditions are met, a bank is more likely to finance the rest, even if you don’t have all of the costs met.

There are, however, banks which are willing to finance home loans of 100 percent, as Poisso and Multari found when they secured a 15-year loan on their home. Yet the individual who has taken out the loan has to continue to put down the costs for at least 10 years, even if they acquire the rest of the money. It is the bank’s way of continuing to collect interest.

The interest rate is also decided by someone’s residency status: Poisso and Multari will only next year acquire permanent residency, meaning that – on their current temporary residency permit – they have to pay a higher interest rate to account for what their bank assessed as a risk. “We’re locked into this rate for 14 more years, but after 10 they said we could renegotiate,” says Multari.

Expats coming from countries such as the US might be used to paying a yearly property tax which is assessed each year based on the current price of the home. In Germany, there is only a one-time tax, called the Grundsteuer. Prospective buyers, however, should find out if the street in front of their home will be reconstructed anytime soon. If so, the neighbours are liable for the costs, which could amount to upwards of €20,000.

Dealing with German bureaucracy

Simply signing a contract is not enough to transfer a property into someone’s name. The contract first needs to be signed in the presence of a notary – with a legally authorized translator if the buyer does not speak German.

Before meeting with the notary, the new ownership and current description of the property has to be recorded at a register at a local district courthouse.

Even if a house is transferred privately, the notary fees amount to about 1.2 to 1.5 percent of the purchase price, in addition to a property transfer tax of 3.5 to 6.5 percent, as well as registration fees of up to 1.2 percent.

But those costs vary from city by city, with extra local taxes which could be levied on the property. “Be prepared to pay a lot more than what you expect. But then that's usually it,” says Poisso.

The Wiesbaden-based couple added that after the purchase of their home, the only thing left to worry about was how to decorate it. 

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For members


EXPLAINED: How to sublet your apartment in Germany

If you’re going away for a period of time or want to cut your living costs, subletting your flat can seem like an appealing option. But there are a lot of things you need to consider first. We break them down.

EXPLAINED: How to sublet your apartment in Germany

What is subletting?

A subletting arrangement is when a subtenant is allowed to use the main tenant’s apartment, or part of it, in return for payment.

Having visitors in your home, even for a period of up to six weeks, does not count as subletting and you do not have to inform your landlord. But be careful: If the visitor starts paying rent, this becomes a sub-letting arrangement and if the visitor stays more than six weeks in a row, you have a duty to inform your landlord.

READ ALSO: The most expensive (and cheapest) cities in Germany to rent a room

If close family members such as parents, children, partners or spouses move in with you, this is also not a subletting arrangement and is considered part of the normal use of the rented property. 

However, you should inform your landlord of such a change in circumstance, not least because at some point the new person living in your apartment will at some point need to register with the local authorities.

Do I have to tell my landlord?

Yes. Regardless of whether you are just subletting a room or your whole apartment, you have to inform your landlord and, in most cases, you are required by law to obtain the landlord’s permission to sub-rent. This applies for whatever time period you want to sublet for: whether it’s for a weekend or for six months. 

One exception to this rule is if you rent a room in a WG (shared accommodation) and all of the tenants are equal parties to the contract. In that case, it’s possible to sublet individual rooms without having to get permission from the landlord, but you should still inform them.

If you try to rent out your place or a room without your landlord’s permission and get found out, you could face legal action, or be kicked out of your apartment before the agreed notice period. 

READ ALSO: REVEALED: The most – and least – popular landlords in Germany

Can the landlord refuse to let me sublet?

If the main tenant has a so-called “justified interest” in subletting part of the apartment, they can demand that the landlord agrees to the sublet and even take legal action or acquire a special right of termination of the rental contract if they refuse.

However, this right only applies to a sublet of part of the apartment and not the entire space within the four walls – in this case the landlord is within their rights to say no to the sublet. 

When subletting part of an apartment, a justified interest must be for an important reason such as a needing to move abroad temporarily for a job or personal reasons, or a partner moving out and the tenant no longer being able to cover the rental costs alone.

In general, landlords shouldn’t refuse your request to sublet unless there are good reasons – for example if the apartment is too small. 

The landlord can’t reject your subletting application without good reason and if they do, you can gain a special right to terminate your rental contract, and can even sue for your right to sublet. 

What information will I need to give my landlord? 

Whether you are subletting a room or the whole apartment – you’ll need to give your landlord the following information:

  • Who is moving in
  • How long you will be subletting for
  • For what reason you plan to sublet

If you want to set up a WG (Wohngemeinschaft or shared flat) as the main tenant, you should discuss this with the landlord beforehand, as it may be worth changing the apartment status to a shared apartment in the main rental agreement. That way, you won’t have to send a new application every time a new roommate moves in.

Do I need a special rental contract?

If you are going to subrent your apartment, it is definitely worth having a contract. 

A contract between the main tenant and the subtenant is completely separate from the contract between the main tenant and the landlord, so all responsibilities arising from the sub-rental contract will fall on you and not the landlord. 

A man fills in the details of a rental contract by hand. Photo: picture alliance / dpa | Armin Weigel

At the same time, as the main tenant, you will still be liable to your landlord for any damage caused by the subtenant, so it is best to put a clause in the sub-rental agreement that outlines how this will be covered, and also to make sure that your subtenant has personal liability insurance. 

There are plenty of websites that offer templates of sub-rental contracts for you to use, and you should make sure your contract includes the following information:

  • The personal details of the subtenant
  • The sub-rental cost and any service charges
  • When these are to be paid
  • Which rooms may be used
  • How many keys have been handed over
  • Details of a possible deposit
  • The condition of the rented apartment
  • House rules, such as no smoking, pets, etc.
  • Liability for possible damages

How much can I charge?

You can usually negotiate the sub-rental price yourself, but you should be careful not to overstep the rental limit per square metre for your area. If you charge over this amount and your subtenant finds out, they have the right to demand the local square metre rental price and you may have to refund them the total amount of overcharged rent.

If you sublet a furnished apartment, you can add a surcharge based on what you will be leaving in your apartment. You should also factor in the energy and water costs.

READ ALSO: Everything you should know about renting a furnished flat in Germany

Do I have to get consent from the local authorities?

In some cases, you will also need to get permission to sub-rent from the local authorities to rent out your place. 

If you sublet in Berlin or Frankfurt, for example, and you want to advertise your flat for holiday rentals, you have to get approval first.

A wooden judge’s hammer lies on the judge’s bench in the jury courtroom in the Karlsruhe Regional Court. Photo: picture alliance / Uli Deck/dpa | Uli Deck

If you go ahead and rent on a site like Air BnB without approval, you can expect to pay a hefty fine. Though the highest possible fine of €500,000 is unlikely, there are numerous reports of people getting fines in Germany of several thousand euros.

Another important thing to remember is that, if you make more than €520 profit in a year from sub-renting, you have to include this in your tax declaration.

Can the landlord demand I pay extra?

If a landlord allows subletting, they can also demand a share of the extra income from the main tenant. The amount of the surcharge cannot exceed 25 percent of the sublease, however.

Useful Vocabulary

to sub-let – Untermieten 

sublease agreement – (der) Untermietvertrag

termination without notice – (die) fristlose Kündigung

ban on misuse – (das) Zweckentfremdungsverbot

special right of termination – (das) Sonderkündigungsrecht

justified interest – (das) berechtigtes Interesse

personal liability insurance – (die) Haftpflichtversicherung

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.