Buying property in Berlin
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Updated 3 months ago

Buying real estate in Berlin is easier than most other popular capital cities in Europe. While prices have risen dramatically, they are still well below the rates in New York or London, for example. Even compared to other German cities, Berlin is several times cheaper. For this reason, as much as half of the new buyers are foreign investors.

However, the number of housing units being built isn't keeping up with demand, so prices are expected to continue rising. Already, there has been a 10-20% annual increase in recent years, and are up over 100% since 2004 according to Knight Frank, a global real estate consultant.

Things to consider before buying property

Why do you intend to buy a property in Berlin?

The most important thing to consider is why you want to buy a home in Berlin. This reason will affect where and what you buy as well as inform your decision on how you do so, especially if you're planning to sell the property in a few years.

Are you trying to profit off the property in the short term or the long run?

Many laws in Germany exist to stop real estate speculation. This has created greater price stability, but it also means flipping property for a profit is more difficult. For example, if you wait ten years to sell, you avoid capital gains taxes. Also, be aware of any existing tenant agreements. It is very hard to evict tenants in Berlin; even for owner move-ins.

Do you have the financing you need?

Many foreign buyers have trouble obtaining German financing for more than 50% of a real estate's value. Make sure you have good credit in Germany, and perhaps, expect to obtain additional loans from financial companies in your home country.

Is Berlin overpriced?

Studies are conflicted on whether Berlin is overpriced. There is plenty to suggest that prices are inflated, but housing construction is below the necessary quota. Scarcity will increase; mainly because it's challenging to build new housing in Berlin due to bureaucracy and the cost of acquiring land.

Besides, prices can vary dramatically by neighbourhood. Of course, the further out you go, the cheaper the property is, and going out to the edges of Berlin may not be so bad. They're beginning to prosper as the city centre gentrifies. These days, many young people and artists live in the outer boroughs of Berlin. But, even within the city centre, you could pay ten or fifteen per cent more if you "have" to live in Charlottenberg, Mitte, or Schoenberg.

How quick can you sign?

You will want to review all necessary documents and be sure you're making the right decision. That said, it's essential to move fast. Many buyers are lined up, and property rarely stays on the open market for long. It is suggested you have all financing in order before committing to a property. That way, you can sign quickly once you find a place you like.

Besides considering why you want to buy in Berlin, and how prices, taxes, and laws will affect your decision, you should get a sense of the neighbourhoods. Each neighbourhood has its own characteristics and plenty of services; so you may never have to leave. Then again, if you buy in a neighbourhood that doesn't suit your style, you'll be spending more time on the U-Bahn subway.

What are the required documents?

Documents and taxes will, of course, be necessary. It's advised to work with an attorney or knowledgable professional. Notaries will not give advice; they play a strictly administrative role. Part of your research will include asking for details on expected ongoing expenses; such as the standard budget for building maintenance. Spaces like stairwells are often owned "in common." Check the building's financial reserves, and be sure to understand what belongs to you and what is designated as common property. Also, you can ask for an assessment of the property's energy consumption to get an idea of ongoing heating costs.

What are the fees?

Fees on services like notary, registry, transfer tax, and agents can range as high as nearly 16%. Plus, as it is everywhere, searching for the right home can take a lot of time. Be sure you expect to schedule appointments in advance of viewing. And be prepared to deal with lots of bureaucracy.

Property laws

Be advised as laws may be changing soon. As Berlin gets more popular and more expensive, locals are taking action and politicians are responding. The city may seek a stronger hand in building public housing. This will squeeze availability in the private market. Foreigners investing in real-estate are being targeted with ideas for new taxes to trim down the speculation. Landlords with major property holdings might have to sell units and slim down. Furthermore, there's a call for a five-year rent freeze. Some of these ideas may become law soon; so be aware of how this could affect your plans; especially if you're trying to profit off property gains.

Useful links:

Handeslblatt
Berlin Cheap
Settle in Berlin

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