Buying in Germany: Associated Costs
It is important when purchasing any property that you understand the associated costs. German Estate Agent fees are paid by the buyer and not the seller, a common feature when buying in Europe.
Agency fees can vary but can equate to upto 6% of the purchase price of the property. Stamp duty and notary fees are additional and can bring purchase costs upto 11% of the purchase price.
Off plan developments and developers can incorporate buying costs such as estate agents fees and tax within the purchase price of the property offering extremely competitive property prices.
Obtaining Finance in Germany?
Obtaining finance on single unit properties in Germany has proven time consuming and bureaucratic and it is often recommended to consider borrowing money on existing UK assets to allow speed and efficiency of your purchase. Single unit lending will be considered by some banks and building societies upto 60% of the purchase price depending on the location and the situation of the property.
When purchasing larger investment packages or investment buildings, finance can typically be offered upto 70% of the purchase price. Finance is subject to the terms and conditions of the lender and finance cannot be guaranteed at any time.
Ongoing Management of Your German Property
Due to the fact that 86% of Berliners rent property, Berlin has an established network of letting and property management professionals. Most let properties will have in place a management company which can be inherited when a buyer purchases a let property.
Management companies such as these, offer complete management of the property including collecting rent, finding and placing new tenants, preparing accounts, etc Charges for this type of service vary depending on the management company but costs can be expected to be between €15-€35 per month or 10% of the total rent.
Invariably a management company will have been instructed on all properties sold through BerlinBuy2let.com.
Maintenance Charges and Costs
Single unit apartments in Berlin are purchased on a freehold basis however, a sinking fund or maintenance fund is normally in place for any future repairs or maintenance that is needed throughout the year. Buyers need to be fully aware of the associated house costs when buying a single unit property, which can vary and depends on the individual building but will normally consist of a cost per SQM per month which is deposited into a sinking fund for any future renovation that occurs.
Costs such as these should be disclosed at the time of reservation of any single unit property in order for you to consider these costs as part of your monthly financial commitment to your property.
Rental Returns – What to expect
Rental yields and returns vary depending entirely upon location. Apartment complexes or blocks of apartments in areas that are socially of a lower grade can achieve rental yields upto 8-10%. Areas that are now popular and more affluent generally can achieve 6-8%. Single apartment yields, again depending upon location and quality are invariably slightly lower, offering the investor between 4-6% yield.
Setting up a Company
Depending on the level of investment it may be beneficial to establish a property company in Germany. Setting up a property company in Germany can be straightforward and practical for your business. Costs for advice and assistance in setting up a company can vary depending on the advisory service and company used. For advice and assistance in setting up a property company in Germany, please contact us on info@berlinbuy2let.com.
Due Diligence – Solicitors Costs
Although many buyers choose not to instruct a solicitor when purchasing property in Germany since the notary system is very secure, a solicitor in addition to the notary, may be considered as part of the due diligence process. Costs for this service can add to the buying costs however.