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Things to consider while buying an apartment in Germany

A lot of people when they move to Germany come with the dream of owning their own apartment in the city. The most obvious thought that comes to mind while a person decides to invest in real estate is, how am I going to arrange for the finances? We’ve tried to cover things that people need to keep in while buying their apartment in Germany.

House or apartment: Where are there differences?

Well it depends on an individual’s needs. For some an apartment works well but for some a villa or a bigger bungalow works. The following points are extremely crucial when one considers buying their own property.


Well it’s obvious that an apartment comes cheaper than a villa or a bungalow. One must consider all the costs related to financing the apartment and add that in the final price. That way, you’ll get clarity about how much financing you would need and the rate of interest that you will be paying. There has been a sharp increase in the real estate prices in Germany in recent years. The demand is high, but the supply is less. There are several applicants for one property and the due process is followed before it is sold. 

Extra charges

There are expenses for insurance, property tax, water, rubbish collection, and additional fees for property management in addition to the financing costs for the apartment purchase. You must establish joint reserves for the entire residential complex in addition to the reserves for potential apartment repairs and upkeep. In the owners’ meeting, the contribution amount is decided.

Notary fees, a brokerage commission, the one -time real estate transfer tax are also something that you need to pay for additionally.

When purchasing an apartment, you can lower your purchase price and avoid paying trade tax if the maintenance reserve for the complex is disclosed separately in the purchase contract. Additionally, the real estate transfer tax is reduced as a result.

Home owner’s association

A homeowner’s association is something you become a member of when you buy a condominium.

You alone cannot make the decision for an entire residential complex. There’s a joint meeting of the home owners and if there’s a decision that the majority of the people approve, you must abide by it.

Resale value

Houses have a higher resale value than the apartments which is why it’s difficult to sell apartments again. It largely depends on the location of the real estate; the condition of the apartment and what services are provided at the residential complex. However, it can be modernized and made energy efficient which helps increase its value.

Financing an apartment

Equity is probably the most important aspect when you’re thinking about housing finance. A higher equity can reduce the financing costs and the tenure of your loan. You must finance about 15% of the purchase price from your own funds. This is recommended. Mortgage without equity is also possible under certain conditions but this leads to high interest rates and a longer tenure.

Like we mentioned above, there are several other costs that one needs to consider while buying an apartment. Notary fees, brokerage commission, real estate transfer tax, cost of entry in the land register, costs for waste disposal, electricity, wastewater & insurance are all additional costs for which you need to have sufficient reserves.

All this you need to consider finding out whether you’re entitled to funding or not. There are special guidelines that you must adhere to if you have children and you’re buying an energy efficient apartment. This will help minimize the risk of funding application rejection.

Special features of an apartment

Once you’ve bought an apartment you also become a member of the owner’s association and have certain rights & obligations. The community lays down rules regarding, the distribution of costs for maintenance & upkeep of the residential complex, distribution of voting rights and regulate voting in the event of structural changes. This helps all apartment owners co-exist. Additionally joint house money is levied which you need to pay once a year to cover for insurance, administration & garbage collection.

Community and special property

In addition to your own apartment, you also own all the common areas such as stairs, the heating system, the gardens, windows, facades & roofs. 

As the owner, in addition to your own apartment, the special property, you also own a so-called community property, which belongs to all residents of the house. These include, for example, stairs, the heating system, the garden or doors, windows, facades and roofs. The declaration of division, which is a crucial component of the purchase contract, specifies what is considered community property.

Insurance with communities of owners

For your own apartment, you are responsible to get it insured. For the residential complex the insurance or the protection is determined by all owners jointly. 

You are responsible for your own apartment and must insure it yourself. The protection of the residential complex, on the other hand, is also determined jointly in the owners’ meeting. A building insurance policy for the residential building and any existing outbuildings is crucial, as is the signing of a home and landowner liability agreement.

A home money loss insurance or legal expenses insurance can also be helpful, and it is advised that landlords obtain both a home liability insurance policy and a rent loss insurance policy. These are responsible for repairs that cause the rental apartment to become uninhabitable for an extended period.

Rent out your apartment

After you’ve bought the apartment, you need to decide whether you want to live in it or want to rent it out. Purchase of an apartment is a great investment to build up some wealth to provide for your old age. Also, the current interest rates allow favorable financing of apartments as an investment. If you’re looking at renting out the apartment, there are a few things you must consider.


Rentals are high if the property location is great. Also, infrastructure, proximity to the city center, renowned builder & the facilities are also some of the key factors. It’s also easier to find a tenant in a larger city. 

A good location of the property is crucial for the success of the rental. A well-developed infrastructure, proximity to the city center and possible employers are usually particularly important. Basically, it is easier to find a tenant in a larger city. An increasing number of households and low unemployment rate are indicators of a desirable real estate area.


One of the very important factors is how the property was maintained. Any renovation or modernization that was carried out, will help potential buyers arrive at a decision faster. The older the apartment, the more money it will require to renovate it. So that means more reserves should be available with you.

Creditworthiness of the tenant

You can evaluate the tenant’s solvency and dependability with the use of a credit report, greatly increasing the likelihood that the rental will be successful.

Rental yield

The revenue you generate from renting out your unit is known as rental yield. This is crucial to the success of your investment. In this case, the purchase price, including ancillary expenditures and maintenance charges, is established in relation to the annual net rental income. The higher the rental yield, the lower the buying price per square meter and the lower the amount of rehabilitation work required.


If you decide to finance an apartment, you should make sure that the apartment fits your needs or that it offers potential for renting and that you are aware of the risks of renting. In addition, if possible, get to know the other apartment owners to make sure that you understand them and share their values. They should agree with the Community Order and the Partition Order.

Finally, it’s critical to determine whether your reserves are enough to cover any maintenance and modernization expenses which might come soon after purchasing the apartment.

Nothing prevents you from purchasing an apartment and financing a condominium if you have been paying attention to everything up to this point.