How To Buy A House In The Germany

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1 Expats Rent, buy or renovate? What is the best solution: renting, buying or renovating? The choice is always a personal one, but a careful comparison of the advantages and drawbacks of each option can be useful in guiding you towards the decision that is right for you. Pros and cons Advantages of renting If you rent a house or apartment, you do not have to spend money buying or renovating a home. Nor do you have to pay property tax. You can invest the money you save or use it for other things. As a tenant in a rented home, you are responsible only for maintenance and repairs; major expenses are usually met by the landlord though it pays to look carefully at what the tenancy agreement has to say about this. Within the constraints of the law and the terms of the tenancy agreement, renting means it is easier to move home at a time of your choosing enabling you to respond more rapidly to changes in your financial position, in your job or in your family situation. Disadvantages of renting You do not own a property, thus missing out on an inflation-proof investment which will not decrease in value. The amount you pay in monthly rent is lost forever. If you use that money to repay a loan instead, you are investing that money for the long term, because you will eventually own the property. You have no certainty as to whether you will be able to remain living in your present home. Within the constraints of the law and the terms of the tenancy agreement, the landlord can terminate the contract at any time, possibly subject to payment of compensation. You will not have complete freedom to make alterations. This is partly because the tenancy agreement will often impose restrictions in this regard, and partly because you will not be able to recover investments you make in alterations at the end of the rental period. Advantages of buying What you see is what you get: you know exactly what the property looks like. You will lose less time, because you will be dealing with a limited number of people: the vendor, the notary or notaries, an employee from your financial institution and possibly an estate agent. You can plan everything better. You can decide almost to the day when the deed of transfer is executed. And after the sale you can take up occupancy immediately. The price of the dwelling is fixed, so there will be no nasty surprises later. Property is a solid investment for the longer term. Disadvantages of buying The property was not designed according to your specifications. That means you have to be satisfied with what you get, unless you begin carrying out alterations straight away.

2 An existing property may have defects or drawbacks which are not immediately obvious. It is therefore important that you inspect the property before buying, together with an expert. An existing property will often have to adapted to your requirements anyway, which means you will have to begin alterations as soon as the purchase is completed. You have to pay land registry fees and legal costs. And later the taxman will also want his share in the form of property tax. You will also be faced with maintenance and repair costs sooner than with a new-build home. It is therefore important to buy a property that is in good condition and in a good neighbourhood. Advantages of renovating You can renovate the property whilst respecting its authentic character. As a result, you quickly acquire a home with a soul. It is easier to find an existing property in a nice setting and on a large plot of land than a large, well-situated building plot. And there is also a better chance that the garden will be mature and well-tended. With a new-build home this requires a lot of planning and organisation. If you carry out alterations to your own property, you know what kind of condition it is in. You also know the neighbourhood and the neighbours. You can do some of the jobs yourself if you are reasonably skilled at DIY. You can also spread a renovation project over a period of time, so that your home develops in line with your financial capacity and your family situation. Disadvantages of renovating It is very difficult to gauge exactly how much a renovation will cost. The proverbial skeletons in the cupboard are almost unavoidable, unless you know the property really well. The best thing is to consult an architect before you start. If you continue to live in the property while work is being carried out, this can prove to be a serious psychological burden after a while. If you rent temporary accommodation during the renovation and the work is delayed, you could find yourself having to pay both the rent and the loan repayments, unless you have taken out a special loan which allows for this possibility. The purchase Try to find out why the owner is selling the property. Before you start talking to the vendor about the price, do some research on current selling prices in the locality. And be sure to have a look at the contract specifications on file at the notary s. These contain a great deal of important information on matters such as easements, charges, rateable value and, possibly, pre-emption rights.

3 Financial plan 1 I plan to buy What are the costs involved? 1 Purchase price Cost of the dwelling Costs of drawing up the deed of sale (notary s fee + costs + registration duties) VAT where payable 2 Supplementary charges and costs Costs of water, gas, electricity, telephone and cable TV connections Any repairs and alterations required Removal 3 Expenses involved in taking out a mortgage loan Charges for drawing up the deed of loan and collateral security (notary s fees + costs + registration duties) Dossier and estimate costs TOTAL 4 Periodic expenses Monthly loan repayments Insurance premiums Loan balance insurance per Possibly disability insurance per Home insurance (fire and other risks) per 2 I plan to renovate a home What costs will be involved? 1 Plans Architect s fee for a complete contract and any supplementary services Possible costs of a safety coordinator for design + execution Possible costs of and energy efficiency and internal climate report (EPB) Possible costs of a structural engineer (e.g. stability survey) 2 Realisation Ground works and foundations Bricklaying Roofing

4 External and internal joinery Plastering, subfloors (screed) Glazing Electricity, lighting Heating Plumbing, sanitaryware Flooring External and internal painting Further internal finish costs Additional work 3 Other costs Equipping kitchen and bathroom Possibly home study Carpets and curtains Alarm installation* Laying out garden and drive Costs of connecting water, gas, electricity, gas, drainage, telephone, cable TV Removal 4 Tax and other costs VAT on invoices from the contractor and architect, suppliers of building materials and equipment, etc. Possibly municipal taxes for issuing a building permit, installing drains, road paving, footpaths, gates In some cases: costs of taking over party walls 3 Expenses involved in taking out a mortgage loan Charges for drawing up the deed of loan and collateral security (notary s fees + costs + registration duties) Dossier and estimate costs TOTAL 6 Periodic costs Monthly loan repayments Insurance premiums Loan balance insurance per * An alarm system can easily cost euros, depending on the number of rooms you wish to protect. You can include this amount in the loan from KBC Banking & Insurance.

5 Expats Possible disability insurance per Insurance policy (fire and other risks) per 7 Building risks Possible insurance for all building site risks (an option in the home insurance policy) per Possible insurance for temporary helpers per 11