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Frequently Asked Questions German property and apartments
This section is a must read if you are planning on investing in German property with us. We're very experienced with overseas property and know exactly what information to get so that our clients can be fully informed prior to purchasing.
For your convenience, we've split our FAQ section into 3 parts. Section 1 deals with general information about the Leipzig area property market, the economy and general property questions.
Section 2 goes into detail about the purchasing process, how to buy from abroad and associated costs.
And Section 3 gives you an overview of the rental situation and what you as a potential future landlord of a German property, will be responsible for.
Of course, if there is anything you feel hasn't been answered, please don't hesitate to get in contact with us and we will be more than happy to help.
Section 1 : General information
Are these German properties free of any debts and unpaid taxes?
All properties we offer come with clean title and prior to you completing the purchase on your German property, legal checks are done. It is written into your contract of sale that the property has no outstanding debts. The notary officer presiding over the sale will also make the necessary checks to ensure the property is free and clear of such encumbrances.
Can a non-German resident own property in Germany?
Germany has no restrictions on foreign nationals purchasing property; all that is required is for you to have a valid passport.
Why are these German properties so cheap?
After the reunification of East and West Germany, a lot of money went into refurbishing and building accommodation in Eastern cities such as Leipzig, with the anticipation of higher rents. However, these rent increases happened too slowly for many developers and much accommodation was put on the market, depressing prices. Now, that oversupply is diminishing as investors realise the great value for money on offer and prices are set to rise.
Why should I invest in the Leipzig and Plauen areas?
Germany is considered the China of Europe; one of the largest exporters in the world with a skilled workforce and the largest economy in Europe (one that is very stable too). And unlike China, it's very accessible for foreign investors.
The country experienced something of a sharp recession in the wake of the US sub-prime crash, as did many other countries. But unlike many of their Western counterparts, Germany is experiencing an impressive rebound. The GDP grew 3.6% last year which is about 24% faster than US and that's without printing shed loads of money.
On top of that, the unemployment rate in Germany hit an 18 year low. In Leipzig for example, the unemployment has been going down yearly and that held true even during the recession period.
So what is generating this success for Germany whilst many of its neighbours clamour for bail outs and struggle with rising unemployment?
- Strong industry: Germany is the world's biggest exporter after China and produces quality goods that the rest of the world is willing to pay a premium for. Asian in particular, as the region has grown wealthier, demand luxury cars. BMW employs 5000 staff and since 2005, the company has invested 1.3 billion into the local economy and built a new production plant. Porsche too are also based in Leipzig are a major employers.
DHL and Amazon are examples of other internationally known companies that have Leipzig as their base.
- Weak Euro: Due to debt worries in the Eurozone, the Euro has remained relatively weak. But this has given German exporters a competitive advantage compared to exporters using other major world currencies.
- Skilled labour force: During the recent downturn many companies based in other countries downsized their operations. Germany on the other hand, managed to keep hold of their skilled labour force. As a result, they have been better equipped to deal with the economic upturns.
So it's no wonder in a recent review by The Economist, Germans have entered 2011 in their most optimistic mood in over 10 years. And we're just as excited at the prospect of German property investment. It ticks all the investment boxes: high net yield, undervalued but good quality properties and a very stable but growing economy. And you don't need to even need to visit the country to benefit!
When I purchase a German apartment, do I need to do any renovation works?
The majority of our German properties, unless otherwise stated, come already tenanted and are in a good condition. Therefore no further works are required at the time of purchase.
Are the prices on these German apartments negotiable?
Because the majority of our properties are very low priced, many vendors don't consider offers.
Can I get finance to purchase these properties?
Finance is available in Germany subject to status however most of the properties we offer tend to be cash sales only. This is primarily because most units are sold very quickly- before a mortgage application can be processed.
Section 2 : The purchase process
The purchase process in Germany is relatively simple and works as follows:
- A deposit of usually 1500 Euros is paid to reserve the property of your choice. This is a non-refundable deposit so if you decide to cancel the sale at a late date, you would lose this.
- A draft copy of the purchase agreement will be sent to you to check along with a closing date. According to German law, all real estate transactions must be signed in front of a German notary officer. If you do not intend to be in Germany to sign the purchase agreement, you will need to give to our German representative a Power of Attorney which will allow them to sign on your behalf.
- Once the purchase agreement has been signed, the notary officer registers the change of ownership in the local land registry and the deeds are issued to the new owner. The final balance of the property must be paid at this time and in most cases, the balance is paid into the escrow account of the notary officer to be distributed at the time of closing.
- From the time the notary officer has issued the deeds, you will be the owner of the property. You will receive a land registry confirmation a few weeks after the sale has closed.
Do I have to be in Germany to complete the sale?
We understand that it may not be convenient for you to visit Germany in order to complete a transaction. And for some of our investors, it may not be possible to even visit the property prior to purchase.
If this is the case, the sale can be completed in your absence. A Power of Attorney would need to be issued to our representative in Germany who will meet with the vendor and notary officer to complete the transaction.
All paperwork will be sent to you prior to the sale happening so you can review them. You will need to sign the POA at your local German Embassy and mail by recorded courier the document back to our German office.
The POA can of course be revoked after completion of the sale.
Do I need to employ a solicitor/lawyer for the transaction?
Using a lawyer is not required by law in Germany but you may of course hire one at an additional cost. However having a notary officer involved in the sale is a legal requirement. The notary officer is separate from both buyer and seller and is there to represent German law and ensure the sale goes through legally.
What are the responsibilities of a notary officer?
A notary officer is required to check all legal documents connected with the sale to ensure they are valid. They will also check that the property has no outstanding debts or taxes owed on it. During the signing of the purchase agreement, the notary officer will read out the contract in front of both parties and ensure everyone is aware of their rights and responsibilities.
Finally, the notary officer will be responsible for registering the property with the land registry at the local municipality.
What costs do I need to pay when purchasing?
Below we have listed the typical purchase costs you should expect to pay when purchasing your German apartment:
- Notary fee: Dependent on property price. In the case of an apartment priced around 20,000 Euros, expect to pay approximately 500 Euros.
- Land transfer tax: 3.5% of purchase price
- Buyer's commission: 3000 Euros on apartments under around 55,000 Euros
- Other miscellaneous buying costs: Approximately 150 Euros depending on apartment price
Section 3 : Rental and property management
Do you offer rental management for the German property you offer?
All our German properties are offered with full rental management unless otherwise stated. The rental management company will oversee tenant liaisons and will be the point of contact for the building management for your apartment block.
The rental manager for your German apartment will also oversee any maintenance works should they be required, deal with any rent reviews, arrange for re-letting and in short, will be your representative in Germany.
How much does rental management cost?
The rental management company charge a monthly fee of 14 Euros (excl. VAT) which is very competitive for the area.
What is the rental market like in East Germany?
Traditionally the German population has tended to rent property as oppose to purchase and as a result, it has one of the largest rental markets in Europe. On average approximately 70% of the population rents and in some parts of East Germany, the figures can be as high as 90%.
In general, the German rental market is very sophisticated and transparent, which is great news for landlords and tenants alike.
Tenants tend to stay in properties for quite long periods of time; in some areas and depending on the type of property, the average can be 8 years! As such, tenants in general tend to take better care of the property they are living in.
Because of the high rental demand, void periods tend to be minimal compared to what may be the norm for rental markets in other countries.
Does the rental manager speak English?
Yes, the management company does speak English.
Can I visit these German properties before I purchase?
Yes, you may visit the area prior to purchase. Whilst we cannot guarantee that the property you wish to view will be available, you can be shown a selection of properties we have available at the time by one of our representatives.
You will also be able to meet with the rental management company that will be taking care of your property.
Just let us know when you are arriving in the Leipzig area so that we can assist with arrangements.
Do I need to get insurance?
The tenants are obliged to get home insurance for the property.
Do you guarantee rents?
No we don't guarantee rents however all tenants are fully vetted prior to moving into the property.
Who is responsible for the maintenance of the property if it is rented?
The landlord is responsible for all maintenance issues. | 
