What fees are involved in a property transaction? 

Aside from your reservation deposit, once you have been notarised you are liable for Notarisation and Land Registration fees which are 2-2.5% depending on value of property (0.5% of which is the land reg fee). A Property Acquisition Tax of 6% is payable usually two weeks after your land registration fees along with the first stage payment of your purchase as agreed with the developer, which typically in Germany is 30% of the property price.  

In summary:  

• Transfer Tax 6% 

• Land Registry: 0.5% 

• Notary: 1% 

• Legal: 1% 

• Total acquisition costs: 8.5% 

What are the mortgage rates like in Germany? 

Germany has historically enjoyed lower interest rates than that of the UK. Eighty per cent of German residential real estate is financed with loan terms of more than five years. Institutions in Germany are estimating the average mortgage rate to be around 3.8% by the end of 2024. According to German real estate agent Volsung, “Unless you are living in any of the countries blacklisted by the EU you are virtually assured to get a mortgage with an LTV up to 60%.” They advise of mortgage rates between 3.85-4.5% varying based on your unique financial circumstances. 

What about any tax liability? 

Owning property means you will have to fill out an annual German tax return with a progressive rate between 14-45%. Even if you fall below the taxable threshold of 14% non-German residents do not qualify for the 0% tax rate on personal income tax rates and so you can expect a minimum tax rate on income earned at 14%. 

That said, there are lots of deductions that qualify for landlords to reduce their income tax burden in Germany. Also, unlike the UK, and much to an investor’s advantage, if you sell after 10 years there is no capital gains tax (unless you own three or more properties). What’s more, if you sell, the buyer takes on all costs associated with the purchase.  

What do I need to know about the rent cap and rent control legislation that affects parts of Berlin? 

As of 15th April 2021, the Mietendeckel (rent cap) was declared unconstitutional and therefore no longer exists. However, there is an older policy in place the Mietpreisbreme which dictates that landlords cannot increase rent above 10% of local prices; a policy that is valid until the end of May 2025. Yet, with rents rising by 42% in the five years up to November 2021, the existence of the Mietpreisbreme is not something that we see affecting landlord’s returns and only adds to Berlin’s desirability amongst tenants as a good place to relocate and rent.