Berlin, Germany’s capital has a very interesting and attractive real estate market. It is renowned amongst local and international home seekers, due to its favorable property prices. Berlin provides its occupants with unrivaled access to both urban and international environments, and being the largest city in Germany, it offers many opportunities for expats looking into buying an apartment in Berlin.
Properties are often kept in the highest standards and the affordable lifestyle, makes Berlin one of the best cities in Germany for expats to invest in.
Berlin Housing Market and Local Neighbourhoods
The German property market varies quite a lot from one city to another. As you continue looking into buying an apartment in Berlin, you should be aware, that its neighborhoods tend to also differ a lot, with each having distinctive characteristics. This also means that there will be pricing differences, advantages, and restrictions of choosing to live in any one neighborhood. It’s recommended that you first schedule a visit to your preferred neighborhood before committing to it. This also enables you to learn about public transport in Berlin, local amenities, and lifestyle preferences.In the last decade, Berlin, has seen a substantial rise in residents’ and investors' demand for new apartments. Part of this increasing demand is due to population growth, as well as the many opportunities for expats, that the city offers. Germany’s capital city also happens to have a thriving economy, which means that its residents are likely to have better purchasing power when shopping for a property in Berlin. Apart from that, there are many reasons why Berlin is one of the best cities for expats.
Berlin is such a popular city, might raise concerns amongst new buyers that property prices in the capital are too high, however, when compared to other major cities, its prices are relatively “moderate”, especially when looking at cities, such as New York, London, or Paris. The welcoming environment, accompanied by attractive interest rates on properties in Berlin, makes the city, a very attractive market for property buyers.Certain areas, such as, Kreuzberg and Prenzlauerberg have become more expensive due to gentrification, but, there are still other worthwhile neighborhoods to consider. Nonetheless, if you look hard enough, it’s still possible to find an affordable apartment in the area you desire.
Benefits of Buying an Apartment in Berlin
One of the main advantages of buying an apartment in Berlin is the city’s prosperous real estate market. Regardless of whether you are buying for investment purposes or personal uses, with some careful planning, it is likely to receive your return on investment and more. Other advantages include;
- The opportunity to live in a dynamic and international city with a high quality of life.
- Many expat-friendly and welcoming neighborhoods to start your new journey.
- A thriving economy and many opportunities for finding a job in Berlin
- Attractive & Affordable real-estate market prices
For those that are currently renting, it would be a good idea to consider buying an apartment in berlin. You can easily do so by substituting your monthly rent payments for a similar monthly mortgage installment. Instead of having a temporary property to live in, with the same money you are paying, you can invest it in an asset, that can eventually be paid off and you gain ownership. Furthermore, it is known that rental prices have been increasing over the years in Berlin.
How to Buy an Apartment in Berlin & Where to Start?
Once you reached the decision of buying an apartment in Berlin, there are a number of steps to follow, in order to get closer to buy your new home. We have prepared a detailed guide to assist you through the entire process.
Research and visit the Preferred City Area
A crucial decision to make before buying an apartment in Berlin is to decide on your preferred area and district. Keep in mind that the capital is quite large. If you want to live in the heart of Berlin area, you should consider searching in the following locations;
- Western areas (Berlin Wilmersdorf, Schoneberg, and Charlottenburg)
- Southern areas (Kreuzberg and Neukolln)
- Eastern parts (Friedrichshain, Berlin Mitte, and Prenzlauer).
They are chosen for buying an apartment in Berlin is crucial for your future commodity, comfort, and happiness. Research and visit the areas multiple times. Different neighborhoods do not only vary in aesthetics but have their own benefits, lifestyles, and building architectures. Always start by getting an authentic feel of the area, go for a walk, and get your bearings. If you don’t find what you’re interested in right away, be patient, and consider expanding your search parameters.Your final neighborhood choice will primarily be driven by factors such as access to entertainment, public transportation, park proximity, and distance from your workplace. This is then followed by additional purchasing factors such as the size of the apartment and the available number of rooms, the building type, the floor level, and the budget.
Setting a Realistic Budget
It is recommended that prior to you start viewing apartments, you research the real estate market to get an idea of the average price range and decided on a realistic budget, that you can stick to. Like that, you can have your focus entirely on potential listings that you can sustainably achieve.
Searching for the Apartment in Berlin
When searching for an apartment online or with an agency, it is recommended that you specifically search for the exact criteria you need. This eliminates all the non-relevant listings for you. You should consider factors such as a used property or new construction, occupied or vacant, ground floor or upper floors, bathroom type, number of rooms, and if possible, even the size in square meters. It’s recommended that you consult with a few real estate agencies to gain some helpful insight. Selecting the right agency means that you will have a reliable ally on your side during the search, more so, if you can’t speak fluent German. Additionally, retaining a good property agency also enhances your chances of getting in early in any new project. Agencies usually have access to first-hand information on new apartments being put up for sale.
Hire an English Speaking Notary
Notaries in Berlin, have a legal responsibility to serve as impartial parties in real estate transactions. The notary is in charge of checking the land register in Germany, to establish whether a given property can be sold. For those that can be sold, a notary also has to confirm whether such properties come with any usage restrictions. Both parties will need to sign a contract, which will contain spelled out obligations, and the steps that will be pursued in case a given party doesn’t fulfill their part. Once signed, the notary will then ensure that the ownership change gets registered with Berlin's local administration and that it’s submitted into the municipal government’s land register.As a buyer, you have a right to select your preferred notary. It’s a right that you should always exercise. It is important to request a copy of the purchase agreement and take your time to go through it and if possible, have a professional translate it for you.Consider preparing a list of questions that you would like to ask, and don’t shy away from asking them. Where a mortgage is needed for the transaction to proceed, it will be necessary to make sure that both parties get into an agreement before heading to the notary to sign the document. Notaries don’t have any legal obligation to establish whether their clients have sufficient funds to help them complete the transaction.
The Process of Buying an Apartment in Berlin
The first step is to start by selecting an apartment. This will be followed by the acquisition process. In Berlin, this process can take up to three months. When dealing with leased properties, the tenant will normally be granted a pre-emption right of up to sixty days, meaning that the process may last even longer.
Reserving the Property
For you to reserve a property when buying an apartment in Berlin, you will need to make a deposit equivalent to 1% of the asking price. The deposit will be refunded once you have acquired the flat. It can also be deducted against the buying price or brokerage fees.
Purchasing & Signing
After reserving the apartment, as the buyer, you need to order a draft of the sale agreement and if you are going to opt for a mortgage, start the application. Once everything is in place, you will need to organize a meeting with your notary to sign the purchase of sale agreement. You may choose to personally attend the meeting or even hire a local legal firm to serve as your representative.During the signing ceremony, the notary that you have chosen is required to go through the sale contract word by word. This will also involve confirming that both parties present clearly understand its details and what is required of them. The parties present may pose any questions they have, and also have a right to interrupt the readings if they don’t fully understand what a certain clause means.
Transfer of Ownership
The office of the notary representing you will handle the transfer of ownership process once the signature and sale agreement is complete. This process can take between six to eight weeks and consists of arrangements with several registries and authorities.Once this process is complete, you will receive a notification when the seller receives their final payment. In total, the process of buying an apartment in Berlin can take up to three months.
Keep a good eye out on the contract! Like in everything, the contract stands as a written legal agreement to clarify the exchange and safeguard both seller and buyer. The contract will need to show several important details such as;
- Whether the addresses and names of both parties and property have been properly spelled. An error, even a simple spelling mistake can make the contract to become invalid.
- A list of the rights of all parties, including third parties such as new owners and tenants.
- The purchase terms, price, and conditions that were agreed upon by both parties, including the preferred form of payment.
- List of parties involved in the transaction and specific payment terms. It’s upon the two parties to decide on the mode of payment. Often, a buyer is required to seek financing. In such cases, the seller has to agree to make a priority notice, which is intended to protect buyers by ensuring that the seller won’t sell to another party.
- Any hidden defects of the property. Seller is not required to point out obvious defects.
- A detailed legal explanation of what will happen in case one of the parties to that contract fails to abide by the contract terms under which legislation, such sale falls.
Taxes, Fees and All Other Legal Issues
When in the process of buying an apartment in Berlin, it will be crucial to first get a good understanding of your financial situation and the costs incurred when purchasing a property in the capital. Consider working with a tax consultant to help you to maneuver through the tax system and any issues that may arise on property purchasing in Berlin. Purchase fees and taxes for buying a property in Berlin, totals up to ca. 7.5% of the asking price. Note that extra fees can sum up to 15% of the selling price. This is broken down as:
- Real estate agent fees — between 3.57% to 7.14%
- Notary fees — 1.2%
- Grundwerbsteuer (property transfer tax) — 6%
- Grundbucheintrag (land registry office fee) — 0.5%
If planning on buying an apartment in Berlin, you should note that the German government has put in place, measures intended to prevent speculation and a drastic increase in prices, in the real estate market. If you plan on reselling the apartment, you have to live in it for at least two years. If you have not lived in the apartment, a period of 10 years of ownership is required prior to selling it.