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Where in Germany can you still snag a home for under €100k?

Real estate experts are warning ever more urgently of a property market bubble in Germany, as prices continue to balloon despite rising interest rates. But some parts of the country are still remarkably cheap.

Where in Germany can you still snag a home for under €100k?
A 'for sale' sign in Schleswig Holstein. Photo: pa | Daniel Bockwoldt

If you are thinking about buying your own house in Germany on a tight budget you can forget about the big cities. Even their metropolitan areas are probably out of your reach.

We decided to look at where in Germany you could afford a property on a budget of €100,000.

To make sure you’re not just getting a shoe box for that money, we also specified in a search on the property website Immobilienscout24 in April 2022 that the property should have at least five rooms and a floor space of at least 130 square metres.

The website, which displays offers from estate agents as well as private individuals, came up with 134 properties currently on the market across Germany.

‘Hidden gems’

What was revealed was a small cluster of properties in and around the small state of Saarland on the French border, while almost all the other properties were in east Germany.

In large swathes of wealthier western Germany there was absolutely nothing to be found in this price range.

Urban properties such as this Altbau in central Munich can’t be found for a bargain. But nor can homes in commuting distance from the major cities. Photo: dpa-tmn | Karl-Josef Hildenbrand

Both Bavaria and Baden-Württemberg, two of Germany’s richest states, had next to nothing on offer. That also goes for the a region of the west of Germany stretching from Cologne all the way up to the Danish border.

Even Brandenburg, once a paradise of cheap properties, is now a barren wasteland when it comes to bargain basement offers, due to the recent surge in interest among Berliners in homes in the surrounding countryside.

A small cluster of “hidden gem” homes could be found in the west in the small state of Saarland. As a former mining region, Saarland is one of the poorer parts of western Germany, but it is also famed for its beautiful Saar river and is close to the wine regions of the Mosel.

Anyone who fancies buying themselves a property just a stone’s throw from the French border should be warned, though.

SEE ALSO: How real estate in Germany has rocketed in the pandemic

Of the nine properties currently on the market in our filter, almost all come with words like “renovierungsbedürftig” (in need of renovations) or “für den Handwerker” (for DIY lovers) – both clear indications that you’ll have to invest quite a bit more money and time into the property before it’s in a condition that you could contemplate living in. For those of you who like nothing better that spending a Saturday afternoon in your local Baumarkt, these could be just the properties for you though.

The rest of the properties were spread across a belt of the country that starts in Lower Saxony and stretches southeast to where Saxony buts up against the Czech border.

The village of Seiffen in the Ore Mountains. Photo: dpa-Zentralbild | Hendrik Schmidt

Twelve of the properties turn up in a single district alone – Vogtlandkreis in southern Saxony.

In terms of salary levels, Vogtlandkreis is one of the worst off places in Germany, so it would make sense that its property market is also on the affordable side. But it is also nestled inside the Ore Mountains. Its national park could offer ideal refuge to those looking to move to a place that offers snow in the winter and long summer hikes.

Generally, the properties on offer are in small villages, but this isn’t always the case. One unusual property to crop up was a “city villa” with 13 rooms in the town of Zeitz in Saxony-Anhalt. 

Energy catch

Another thing that you should be aware of when thinking about buying a home on the seriously cheap side is the exorbitant energy costs that are likely to come your way once you’ve moved in.

Almost all of the houses that turned up in our filter, over half of them (70) had an energy efficiency class of H, which is the worst possible classification for energy efficiency in Germany.

Consumer watchdogs warned back in 2019 that you are likely to pay energy costs upwards of 13 euros per square metre for a home in the H energy class. That equates to utility bills of at least €1,690 each year. By comparison, a home in the energy category D has estimated energy costs of €6 per square metre.

And that number is likely to be much higher now due to the energy crisis caused by the conflict in Ukraine.

Only four of the properties in our search had an energy class of C or above.

SEE ALSO: Where you’ll find Germany’s most expensive apartments

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The rules foreigners need to know when buying property in Germany

If you are serious about buying a property in Germany, either to live in or as a form of investment, you'll need to know these important rules on everything from residency to taxes.

The rules foreigners need to know when buying property in Germany

As we all know, property is generally a solid investment – as long as you have enough cash to afford the considerable up-front payments involved. 

Knowing whether now is the right time to buy is not easy. A recent drop in property prices in some German cities after years of dramatic price rises could indicate that there are deals to be had. On the other hand, the decision by central banks to put up interest rates in response to inflation could mean that taking out a mortgage will become less attractive.

But it’s not just the higher costs of borrowing that you should be aware of when buying a property. Additional costs, including taxes and real estate fees, could add a further 10 percent to the total spend on top of the actual price of your new home.

Meanwhile, people hoping to buy a property for themselves should be aware that sitting tenants are well protected. If you buy a property that is already let you will have to wait for months or even years before you are allowed to move in yourself.

Residency rules

The first thing to clear up, which will come as a relief to those who don’t hold German citizenship, is that there are no restrictions on foreigners buying property in Germany. That applies regardless of whether you are resident in the country or not.

Arguably, one downside of this light-touch approach is that it has helped fuel the massive surge in property prices that has taken place in recent years.

A report by Die Welt newspaper in 2018 found that almost half of property deals worth €10 million or more were carried out by foreign investors. Studies also suggest that the Italian mafia have bought billions of euros worth of German property in order to hide the source of their ill-gotten gains.

Taxes

Housing under construction in Lower Saxony. Photo: Julian Stratenschulte

The biggest additional cost of purchasing a property in Germany comes in the form of the Grunderwerbssteuer (land transfer tax). This tax applies both for properties that have already been built and for building plots.

The size of this tax is set at the state level, meaning that someone buying in Saxony (tax rate 3.5%), for instance, will face a much lower tax bill than some buying in neighbouring Thuringia (tax rate 6.5%).

Those huge differences in rates mean that the tax on a property sold at €500,000 could end up being €15,000 more just a few kilometres down the road.

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The states with the lowest Grunderwerbssteuer rates are Bavaria and Saxony, both of which haven’t raised the tax at all this century. Most other states have adjusted the rate over the past decade and purchasers should expect to pay an additional six percent of the purchase price to the taxman.

Debate has been raging in recent years about whether the size of the Grunderwerbssteuer is making it impossible for young people to get onto the property market. Studies show that it takes the average German four years to save to pay this sum alone, which often can’t be financed through a mortgage.

Some states, such as Bavaria, are pushing for a federal law which will free first-time buyers from paying the duty. The federal government has also promised to reform this tax but nothing is set in stone yet.

Estate agent fees

Up until recently, the person or company buying a property had to pay a huge commission of over seven percent of the purchase price to the estate agent. Coming on top of the land tax, that was a prohibitive cost for many people looking to get onto the property ladder.

But a law which was passed through the Bundestag in 2020 ensured that the estate agent fees would have to be split evenly between seller and buyer. Since then the buyer has “only” had to pay around 3.5 percent of the property price to the estate agent.

Experts advise though that one should try and negotiate a lower fee with the estate agent before the final contract is signed.

READ ALSO: How to sublet your apartment in Germany

Notary fees

Another notable cost involved in buying a property in Germany is the notary fee, which is the sum you give to the public office that ensures that the change of ownership becomes a matter of official record.

People who tear their hair out at the patchwork of rules across the German states will be relieved to know that the notary fee is set across the whole country at 1.5 percent of the purchase price.

Sitting tenants

A German couple view an unrented property. Photo: dpa/RTLZWEI, EndemolShine Germany | RTLZWEI

Another key thing to consider when buying a property is whether it has sitting tenants. 

If you are buying the property as a long-term investment there are several advantages to purchasing one which is already rented out, not least the fact that let properties tend to cost significantly less than unlet ones.

When you buy a let property the tenants and their rental contract come with it, which means you won’t have to deal with the hassle of finding a new tenant and agreeing on a new rental price.

On the other hand, German rental law ensures that tenants are protected against sudden hikes in their rental terms, meaning you might take over a property that is leased at under the current market value and find it hard to raise the rents. Rental law also protects tenants from eviction so as to prevent landlords from pushing them out in order to re-lease the property on more lucrative terms.

One of the few legitimate grounds for cancelling a rental contract is if you or an immediate family member plans to move into it, something known as Eigenbedarf (personal use). However, German rental law even gives some protection to sitting tenants in this scenario.

Typically a tenant who has been living in the property for a number of years needs to be given nine months’ notice before you can move in. In some states though, local laws give much more protection. In Berlin property owners are subject to a ten-year freeze on evicting a tenant starting from the point at which the property is purchased.

These complex rules surrounding tenancy rights mean that one it is advisable to consult a specialist lawyer about the particularities of local law before you make any such purchase.

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