How much will it cost me to buy a property?

It is worth noting that in Germany it is normally the buyer and not the seller that pays the Estate Agent fee.

This fee can be substantial, usually around 6%. When you add the stamp duty (currently 4.5%) and notary fees, total extra costs can add up to around 12%. Remember though that most properties are already priced incredibly cheaply when compared to the UK and other European capital cities!

If I am buying to let, who will manage my property?

Germany has a well developed letting system with many letting management professionals. A Management company should be engaged to run your property purchase. This company would do complete management including collecting rents, installing new tenants, preparing annual accounts etc. The charge for this service may vary but typically would be €15-20 per apartment per month. We will be able to put you in touch with some agencies.

What are the ongoing running costs?

Apartments in Berlin have a ‘Hausgeld‘ a monthly charge which normally covers such things as heating, hot water, maintenance, buildings insurance and rubbish collection. If your apartment is let, the tenants will usually be responsible for a proportion of this charge.

What is the position about getting finance in Germany?

As a foreign investor it is unusual to be able to get more than 50% finance on your purchase from a German bank. If you need assistance with this, our Berlin agent partners are usually able to help.

What are the rental yields?

This varies from property to property and area to area. On blocks of apartments in cheaper areas of Berlin yields as high as 6 to 8% can be found. More affluent areas around 5-6%. On individual apartments the yields can fall to around 4-6% dependent on location and the condition of the property. At Palmer Collins we believe that you should be investing for potential HUGE CAPITAL GROWTH that this market offers, not just for short term yields.

What rights do tenants have and can I increase the rent?

We believe that Berlin is a great investment but you should understand the legal framework you are buying in. There are a few legal provisions regarding the level of rent a landlord can ask from the tenant, although there are rent ceilings on many properties so it is necessary to check in advance what level of rent is applicable to your particular property, if any. You will also often find that the rent cannot be increased beyond certain set limits - the most common limits are 20 per cent over a three-year period and no more than one increase every 15 months.

The landlord can normally increase the rent within the legal and contractual limitations set out in the rental contract. Most of the time, an increase in rent is possible after modernisation or refurbishment which has increased the standard of the accommodation, or if the current rent has not reached the level set out in the official rental tables.

Unlike Ireland and Britain, German residential leases are generally agreed for an indefinite period of time - Germans tend to rent apartments with a long-term outlook.

We recommend that if you are intending to ‘buy to let‘ that you speak to our recommended English speaking lawyers in Berlin. Alternatively there are companies that specialise in short term lets (1-6 months) such as http://en.coming-home.org/index.php? where you can get a much higher rental yield but with no guarantees of full time occupancy.

Prospective buy to let investors should also be aware that if you purchase a vacant property, it is possible to let for fixed terms eg: 1yr, 2yrs, 5yrs etc. This gives greater flexibility for you the owner to make the property vacant and realise your investment more profitably.