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Frequently Asked Questions

What is required to reserve an apartment?
In order to reserve a property with FrontLineBerlin we will require a deposit of 3,000 euros and a copy of your passport.

The apartments for sale are tenanted - how does this work?
The classic investment product! The properties currently featured as tenanted on our web site may have long or short term tenants who in fact pay for the "running costs" of the apartment. This includes not only the obvious costs such as electricity, water, etc but include maintenance, minor repairs and rental management. All the costs associated with the property management company are paid on a monthly basis by the tenants.
It is the monthly rental being paid that provides such a solid investment return to the buyer. Yields are generally in 4-6% range offering an investment which is effectively self financing. However, it is the capital appreciation that is the real potential - we believe property prices in Berlin will double over the next five years!!

 

What is the buying process?
The buying process in Germany is quite similar to that in the UK.
The main difference is the requirement to have the contract signed in the presence of a notary. Once you have found a property that you like you make a formal offer. With the sale price agreed you will be required to place a reservation (small deposit) with FrontLineBerlin, this is normally 3,000 euros. At this time you will need to have a solicitor who is employed by you to look after your interests. It is also quite common to give your solicitor "Power of Attorney" so that they can continue to represent your interests and indeed subsequently complete your purchase at the notary without your presence.
The purchase contract will include all property details such as the agreed price, completion date, payment conditions and stipulations regarding either party withdrawing from the purchase.
In order to complete on the sale, both parties need to be present to sign the final contract before the notary. With ‘Power of Attorney’ your solicitor will complete the formalities on your behalf. Naturally all discussions are in German so if you decide to be present you may need a translator. You will need to have a valid passport to process your purchase. Once the contract has been signed the deal is complete, and the notary will list the change of ownership with the land registry.
With regard to buying costs you will need to allow in the order of 8-10% of the purchase price for property transfer tax; solicitor; notary charges etc.
If you require a Mortgage there will probably be an additional 1% arrangement fee. Mortgages are readily available through most German banks and typically are offered at 50-60% of the purchase price. As in the UK you will be required to demonstrate that you can make the Mortgage payments! You may, of course, find it more convenient to arrange finance in your home country.

What are the approximate buying costs?
With regard to buying costs you will need to allow in the order of 8-10% of the purchase price for property transfer tax; solicitor; notary charges etc. If you require a mortgage there will probably be an additional 1% arrangement fee. Mortgages are readily available through most German banks and typically are offered at 50-60% of the purchase price, subject to status. For investing in Berlin you should assume that you will probably need to deposit 40% of the purchase value with the rest available via a mortgage. It’s possible you may find it more convenient or beneficial to organise your finance in your home country.
Unlike the UK, it is normal here in Germany for the buyer to pay the estate agent fees, however, we have negotiated an excellent deal with the owners who will pay us directly hence saving you this expense!!

What is the rental guarantee?
The rental guarantee is provided through the property management company which is one of the most successful currently in the Berlin area. As they know the rental market so well, and remember 88% of Berliners rent, they are able to underwrite the rental guarantee. This works by offering a guaranteed level of rent per square metre over a ten year period. All the costs associated with the property management company are paid on a monthly basis by the tenants.

What are the costs associated with managing the property?
Each of the developments featured on our web site has a property management company in place. This company typically undertakes all the property maintenance and management services including minor repairs, redecoration, garden maintenance, rental management services, etc.
These services are paid for on a monthly basis as an element of the rent paid by the tenants. Additionally tenants also pay for the "running costs" of the apartment. This includes not only the obvious costs such as electricity, water, etc but include maintenance, minor repairs and rental management.

What capital gains tax applies on re-sale?
Capital gains tax applies on re-sales within ten years of purchase and is applied at the income tax rate of the owner on the gain in the property value. After ten years there is no capital gains tax liability and, interestingly for investors, if you were to re-invest your return from the sale in a further property then this also mitigates any tax liability.

What mortgage facilities packages are available in Germany?
Most German banks are offering mortgages to UK and Irish buyers subject to status. Interest rates are typically around 5%, however, a number of clients source their finance in the UK where the borrowing levels are generally higher and the practicality of managing arrangements in English are preferable. German banks are generally prepared to finance 50% of the purchase price with 60% possible subject to status.

How do rents increase?
There are restrictions on the level of rent rises in Germany. Overall rents cannot increase by more than 20% in a three year period. In practice, market forces tend to apply and rent increases are managed by the property management company which can best utilise its local knowledge. Statistics are available publicly through local town halls indicating the levels of rent per square metre in any neighbourhood.
In some cases rents are controlled, typically where grants have been utilised to undertake modernisation but these do have a determined time span. Similarly, rents can be increased after a private modernisation but will still need to reflect rents achieved for similar quality properties in the local area.

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