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Properties in Berlin from the Berlin property experts
Your Questions Answered
What costs are associated with a Berlin property purchase?
How will my Berlin Property be managed?
What are the ongoing running costs?
What is the position on getting finance in Germany?
What rental return can I expect?
Are there any restrictions on rental increases?
What rights do tenants have?
What costs are associated with a Berlin property purchase?
An unusual feature to note about the German process is that it is not the seller that pays the Estate Agent fees but the buyer. Typical closing costs are as follows:-
- Land Registry 3.5%
- Notary Fee 1.5%
- Agent Fee 6.0%
As most properties we source are direct from the vendor costs will be lower as we do not charge an agent fee.
How will my Berlin property be managed?
Berlin has a very strong rental market with around 85% of the population being renters, there are many management companies and this gives the opportunity of making a Berlin buy to let investment a viable option. A Management company should be appointed to manage your Berlin property and ensure a total hands off investment
. The management company will provide a complete service, including sourcing new tenants, collecting rents and prepare annual accounts. The normal charge for this service may vary from €15-20 per apartment per month. Buy Berlin have a number of well established management companies that it is happy to recommend.
What are the ongoing running costs?
In addition to the 15 – 20 euro management fee , you need to allow a monthly maintenance charge of around 5% of your buy to let rent.
What is the position about getting finance in Germany?
Buy Berlin are able to assist our clients securing finance in Germany enabling them to leverage their purchase.
Through our direct contact with leading German banks and our team of brokers based in Berlin we are able to provide assistance throughout the mortgage application.
Typically on blocks of apartments 70% is lent. On individual Berlin apartments some banks are now offering 50-60% subject to normal credit checks.
What rental return can I expect?
This varies from region to region. Complete apartment blocks in the less desirable areas of Berlin have yields as high as 8 to 10%, with more affluent areas yielding around 6-8%. On individual apartments the yields range between 4-6% dependent on location and state of the property.
There is also the opportunity of purchasing vacant apartments and giving these to specialised companies who can offer them on short term tourist and corporate lets with yields of up to 15% achievable.
Are there any restrictions on rental increases?
Although investing in Berlin is a fantastic opportunity, it is important to understand that the legal framework in Germany is different to that in the UK. There are legal provisions in relation to the amount of rent a landlord can charge the tenant and it is important to check the rent ceiling applicable to the particular property.
A landlord may increase rent within the limitations set out in the tenancy agreement, official rental tables and German law. Official rental tables are published which take into account the size of the property, the year of construction and features of the property and are based on a cross-section of residential lettings.
There are limits by which rent increases may be applied and the frequency of increases are restricted. For instance, 20% over a period of three years and one increase per 15 months. These restrictions do not, however, apply to increases of rent after modernisation or refubishment as this increases the standard of the accommodation. Also increases may be applied if the current rent charged does not reach the level or rent set out in the rental tables.
What rights do tenants have?
As German residents tend to rent properties on a long-term basis, German residential leases are agreed for an indefinite period. Unlike the shorthold tenancy agreements issued in the UK, a tenant will be required to provide three months notice to terminate the residential lease.
For commercial leases, the lengths vary between three and ten years with options to renew for further years.
A tenant will be liable for any damages. A deposit is paid to the landord to cover for any damages although any losses for damages that exceed the deposit amount will need to be recovered at court proceedings.
Another important aspect to remember is to check the identity of the tenant well in advance and you are permitted to copy their identity card before signing contracts. It can take anything up to well over a year to evict a tenant because it can take between six and nine months from filing an action to receiving judgement and then a further two to three months to have the eviction carried out. In addition, the fee for eviction can cost the landlord between €2,000 and €4,000.
