property in germany an overview
News Posted On: 27 April 2009
History has not been in favour of German real estate investment, as the fallout of reunification was the sluggish property market for a long period of time. But the German property is back with a bang and is in the pink again! It took a Soccer World Cup of 2006 to revive the fortunes of a laidback property scenario in Germany.
Germany has clocked a late recovery of years, and thus, a late entrant in the real estate business. Though the country is considered as technologically more advanced than most of its European counterparts, it is the housing segment that requires a little bit of cosmetic work to bring it back to where it deserves to be.
Salient Features of Germany from Investment Point-of-View
Any prospective German real estate investor must ponder over the following features of the country before making up his mind –
1.The reunification of Germany in 1990 was a welcome global development. But the country had to pay a huge price in terms of a buckling economy. The positive vibes about German property is a recent development. Historically, the country was a war-ravaged nation that hardly attracted offshore investments. But modern Germany has not only survived, but also emerged as a strong and vibrant European economic powerhouse.
2.Since German property demand is of recent origin, the experts have already predicted big things for German real estate, and the time for investing here is now, as the prices are on an upswing of late.
3.Most Germans have traditionally preferred rental accommodation than owning a house of their own (which is just 43% of the German population). This spells a great investment opportunity for overseas investors who wish to earn handsome rental income from a decent property in one of the happening cities of Germany, like the capital city of Berlin.
4.The country is not too high on the tourism map of Europe. However, this doesn’t mean that Germany has any dearth of tourist spots. The rich history of this country holds an obvious edge over other countries in Europe. It’s just that successive governments were too busy to promote tourism in the wake of economy revival. But the potential for this sector is immense and the country is widely believed to welcome millions of visitors annually in the coming years.
5.Germany’s technology potential is widely respected all around the world and it is a powerhouse in electronic goods segment. This has lent an added weapon for the German economy to prosper. Improving economy also means a consistent drop in the unemployment rates in the country. The nation’s industry is also giving full support to bolster the sagging fortunes of the country’s economy. Germany has emerged as the world’s largest exporter by volume, with nearly a billion dollars in exports in 2006, and with a trade surplus of over $200 billion in the same year.
6.The capital city of Berlin has emerged as the best place to invest in Germany. With money giving ample fuel to the economic health of the country, the capital city is the obvious choice for real estate investors from around the globe. The government is awake to the importance of foreign investment in the country. Resultantly, there has been a surge in demand for property in Berlin. As an indicator to the British investors, apartments in Berlin start from £35K, and depending on the size, location, and other considerations, the price may go up to as far as £200K.
Legal Position of foreigners owning property in Germany
The German government has not imposed harsher limits on the foreign ownership of real estate in the country. Non-Germans can also buy, own and sell an unrestricted quantity of land and homes. They can also hold property as landlords, and even develop property after satisfying certain simple rules and regulations.
Buyers from EU countries have an added advantage of access to residency and labour rights as set out in EU law. The Non-EU investors must consult the local embassy regarding their rights in Germany.
A legal professional is required to carry out all the paper work in Germany for the real estate investors. This is because most of the administrative work requires to be executed in German, and despite your best knowledge of the language, you’ll be ill at ease while handling German authorities.
German Banks are also offering low interest rates on mortgages. Most banks will loan up to 70 per cent of the purchase price, though you have to fulfil certain conditions. The maximum mortgage terms are 30 years on a rate of fixed interest.
The property in Germany is chargeable to Property Tax as per different rules of different regions. However, the rates are not too prohibitive. Even the rental income is chargeable under Income Tax. It’s better you hire a local attorney to shift your worries about taxes regarding your property in Germany.
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