Are you considering investing in real estate in Germany? Recently, we took the plunge and purchased property in Germany. Here are my tips that you should consider before buying land in Germany as a foreigner.
PS: Don’t forget to download my detailed checklist of all questions to ask before you buy a property in Germany.
Germany has the lowest home ownership rate in Europe.
As of 2019, only half of the German population possess their own home. For various reasons including the post-WW2 financial and political slumps, home-ownership in Germany still has not picked up. It isn’t a bad thing necessarily.
Renting is a much-favoured way of housing in Germany.
Tenant laws are highly protective of the tenants, so it is no surprise that Germans just don’t bother buying homes. However, this should not stop any long term expats from buying a property in Germany.
partner fiancé husband and I recently bought land for building a future home. This is the first major investment (:O !) for us and a huge learning experience.
Here are some of my tips for buying land in Germany as a foreigner.
Disclaimer: This post has some affiliate links of services that I used during my property hunting process. I may earn a commission from the qualifying purchases. This way I can keep maintaining this blog.
Decide What You Want
Do you want to build a home from scratch or do you want to buy an existing house? Both have pros and cons. Let’s take a look at both of these scenarios:
Buying Land to Build a House From Scratch
- The biggest advantage of buying land is that you can build a customised home and get a design that fits your taste and preference- within the limits of the legal guidelines that is.
- In some areas of Germany, it is actually cheaper to buy land and build a property brick by brick.
- Too many things to take care of. Too much paperwork as you have to deal with different offices, contractors and maintain a HUGE amount of contracts.
- Longer waiting time until your home is ready for you to move in
Buying an Existing House
- Much more straightforward than buying land and building a house.
- Shorter move in time.
- You have to settle for what you got. It is very hard to make any changes to an existing house in Germany. So once you have purchased it, you won’t be able to alter the template of your house. At least not without a shitton of paperwork and permits.
- It is often more expensive than building a house as the value of ready to move in, finished properties is higher.
We evaluated all of these options.
Eventually, we decided that we will go ahead with construction land in the Bavarian countryside. For us, it was really important that we get to build a home according to our own specifications and requirements.
We are going to invest hundreds of thousands of euros in either case. So might as well, invest it into a house that we designed for ourselves.
If you want to find a plot of land in Germany to build a house, then start here. Make sure to change the location to the city of your choice.
Recommended Reading: Real Estate Investments in Germany: Transactions and Development
Start Search Early and Take Your Time to Research
This is pretty much a no-brainer.
Find a perfect building plot can take a very long time. The more search criteria you have, the longer it may take you to find a building plot that meets your requirements.
In Germany, you can search online extensively through some popular real estate websites.
You want to be aware of the fact that many of these properties have a ‘makler or provision’ fee attached to them. This fee is usually calculated at 3.5% to 5% of the property price. When you buy a property directly from the owner, you can skip this extra fee entirely – but such properties are rare to find.
Try search terms such as ‘provisionsfrei grundstück kaufen + your desired location’, ‘grundstück Ohne Makler kaufen + your desired location’ or ‘grundstück von Privat kaufen + your desired location’ to find provision free properties in your area.
Recommended Reading: The Complete Guide to German Property Investment
Widen Your Search Radius
Let’s say you are working in Nürnberg city centre and want to live close to the city, then you may have a hard time finding a plot or even a house meeting your requirements or budget.
In such a case, you can look around Nürnberg suburb or even land area. In German, the land area is called ‘Landkreis’. Look for available plots in these areas. Too often cost per square meter is much lower in these regions than closer to the city.
You may even find a bigger plot for a lesser budget.
Depending on your location in Germany, anywhere within 30-40 drive-minutes from the city centre is generally a good location to search for cheaper land.
But of course, it depends on your lifestyle.
Are you willing to travel for half an hour or more to work each day? Is this a good trade-off for buying a plot for a lower cost? Would you rather live closer to the city or in the suburbs? Evaluate your options thoroughly.
Mind The Local Development Plan
Do you want to build a city villa or log cabin? One or two stories? Flat roof or saddle roof?
You may have something very specific for your dream house, but you may not be able to realise it everywhere in Germany.
Before buying building plot in Germany you should be fully aware of the development plan (Bebauungsplan). The development plan regulates how a residential area may be built.
Potential home builders should make sure to read the regulations – and know some formulas and abbreviations before purchasing the land. The best way to know what you can build on your potential plot is by getting in touch with the seller or agent directly and request more information.
Recommended Reading: Tricks and Bricks Germany – 75 Property Investment Tips
Are There Any Building Restrictions?
Ask for the building permit details from your seller or agent beforehand.
A building permit (Baugenehmigung) is a certificate from the local building authority. With this permit, the building authority indicates that it has no reservations about the planned construction project in terms of legal regulations.
However, the building permit does not mean that the builder may start construction immediately.
For this reason, the building permit is also referred to as a “limited clearance certificate”. Only when the building permit is available, you may begin the construction work (including the excavation of the earth).
This may only happen sooner if a partial building permit already exists. After the building permit, further procedures may be necessary to finally approve a construction. These include, for example, emission control or water protection tests.
Another thing to consider is the construction deadline (Bauzwang).
This deadline generally dictates the time by which the construction of the house should begin or finish on the plot. Some properties may have a deadline of five years or some may have none.
Our property does not have any such construction deadlines, so we have the freedom to take some time to plan, and save up before starting with the construction of the house.
Is the Plot Developed?
Partially developed (teilerschlossenes Grundstück) not developed (Nicht erschlossenes Grundstück) is a piece of land that is not yet entirely suitable for construction. For a plot to be considered fully developed (vollerschlossenes Grundstück), four basic supply lines must be available.
These are: gas, water, electricity and sewage.
The partially developed property is characterised by the fact that not all four supply lines are available. This means that the buyer must undertake this development after purchasing and that generally leads to additional costs.
A partially developed plot is usually cheaper.
However, you have to be prepared to invest at a later stage. The costs for a complete development must be included in the construction planning and financing.
Which brings us to the next point…
Recommended Reading: Single-Family Houses: Contemporary Homes in Germany
Can You Afford It?
Buying the building plot is simply the first stage.
Depending on your location your land could easily cost several hundred thousand. The average cost per square meter can range from €180 to €2500 depending on the city. In the land and smaller cities, you have much more variation in the price range.
Besides the cost of the building plot, you’d also need to think about financing your actual home. As mentioned in the above section, if your plot is only partly developed you will have to incur the costs of completely developing it.
The cost of land development can be high and is largely borne by the property owners.
Municipalities usually cover a small part of the fees, but the proportion of owners is much larger.
For example, the development costs are higher in an urban city area. On the other hand, plots of land “in the countryside” are relatively cheap to develop.
Make Sure To Visit The Property BEFORE Signing Anything
Make sure to inspect the land in person and get a feel of the surroundings.
A personal visit is the best way to do that. Set up a personal appointment with your seller or agent. Ask them to take you to the property in person. It is a very normal part of the process anyway, so they will offer this even before you request.
Don’t hesitate to clarify any doubts about the neighbourhood, why the land is on sale or technical questions about the development and building permissions.
Hopefully, by now your German should be good enough to navigate through such a conversation. If not, then take your German-speaking spouse/ SO or a friend to help you with the meeting.
From our experience, we found that a personal visit (more than just once) can give you extensive insights that can help with decision making.
Sometimes your preferred land may have a slope which usually involves additional costs for preparing the foundation of the house. The surroundings may be too loud. Or too quiet. Is there enough sunlight or is it getting blocked by nearby houses?
These things you can only evaluate in person.
Walk around the neighbourhood a few times and gauge if you have a good feeling about it. Then, do it a few more times at different times of day and evening just to be sure.
Take a drive from there to your workplace or to the nearest shopping centre. This is how you will be travelling each day once you have moved in. Get a feel for everyday activities before you sign any contract.
FREE Checklist For a Land Buyer in Germany
Have more questions and doubts? Then download this FREE checklist consisting of 30 questions you should consider BEFORE buying land in Germany.
If you are still happy with the plot, then…
Consider How You’re Going to Finance Your Property
Now comes one of the most challenges parts of buying land in Germany as a foreigner.
Financing your property – Are you going to finance it through a bank or privately?
Both have advantages and disadvantages. Financing with a credit institute is a no-brainer since most of us do not have six-figure chunks of money sitting in the bank. The other option is, of course, to finance everything privately. If you have substantial savings you can fund yourself without any credit. This way you can also save on the interest rates payments.
Financing properties is a huge complicated topic, which cannot be covered in one small section. Watch out for a comprehensive guide on getting a house building loan in the next few days.
In the meantime, you can get custom house financing offers from Immowelt through this simple form here
Last but not least
Get ALL Your Insurances Up-to-Date
As we left the Notar’s office after signing our contracts, our Mackler congratulated us and promptly told us that we must get a private liability insurance for our newly bought land. It was just the beginning of winter and he warned us that if someone slips on our sidewalk because of the frost we will have to pay for any related expenses.
And he had a point.
As you may be aware, Germans LOVE their insurances. There’s really an insurance for everything here. 😉
As a brand new property owner in Germany, you should absolutely invest in good liability insurance for the private home developers and landowners. In German, it is commonly known as Bauherren-Haftpflichtversicherung and Haus- und Grundbesitzerhaftpflicht.
Quoting the German Civil Code that regulates the obligation for every private home -builder to be liable for damages caused by the building activity (§ 823 BGB).
“Anyone who willfully or negligently violates the life, body, health, freedom, property or any other right of another unlawfully is obliged to compensate the other for the resulting damage.”
The German Civil Code also requires every house and landowner to ensure the road safety of their property and to be liable for any damage caused (§ 836 BGB).
“If the collapse of a building or other work connected with a property or the detachment of parts of the building or work kills a person, injures the body or health of a person, or damages a property, the owner of the property, if the collapse or detachment is the result of faulty construction or poor maintenance, is obliged to compensate the injured person for the resulting damage. The obligation to pay compensation does not apply if the owner has observed the care required in traffic for the purpose of averting the danger”.
These laws have far-reaching consequences in Germany – enough to lead to lifelong bankruptcy. The responsible party is liable to compensate for unlimited amounts and with their entire current and future assets. A claim for such damages can basically lead to complete financial ruin.
Therefore, the protection with a house builder’s liability insurance is extremely important. As with any kind of insurance in Germany, there are a number of providers who offer this kind of coverage.
CosmoDirekt offers comprehensive coverage for both home and landowners and for those who are planning to build their property sometime soon.
Here you can calculate the one-time fee for CosmosDirekt’s Bauherren-Haftpflichtversicherung
Click here to check out CosmosDirekt’s Haus- und Grundbesitzerhaftpflichtversicherung starting from €1.79/month
So that is how I ended up buying a property in Germany (as a foreigner). I hope these tips will be helpful when the time comes for you to buy a home or land in Germany as an expat.
Start here to find and buy a plot of land in Germany to build a house.
Did you buy a property in Germany? What was your experience of buying land in Germany as a foreigner? Let us know in the comments below.