Purchasing Berlin Real Estate - What is the Purchase Cost?

One of the most asked questions by investors new to Berlin is regarding the typical cost involved in making a real estate investment.

The cost depends on the price of the property and the cost tables for the notary public and the land register. They are digressive, in other words, the higher the price, the lower the percentage of the cost.

For a property with a purchase price of EUR 1 million the cost would be roughly:

Notary Public for the contract: EUR 6,965
Escrow account if required (based on EUR 500k): EUR 3,020
Land Register: EUR 4,280
Property Sales Tax 4.5% in Berlin: EUR 45,000
Agent Commission: Between 4 and 6 % plus VAT, (4%): EUR 47,600
Total: EUR106,865

For a property with a purchase price of EUR 2 million the cost would be roughly:

Notary Public for the contract: EUR 13,660
Escrow account if required (based on EUR 1 mill.): EUR 5,995
Land Register: EUR 8,410
Property Sales Tax 4.5% in Berlin: EUR 90,000
5Agent Commission: Between 4 and 6 % plus VAT, (4%): EUR 92,2600
Total: EUR213,265

For the quoted size of investment as a rule of thumb it is safe to use 10 % purchase cost for an initial calculation, with higher values reducing the percentage slightly.

These figures also identify the items where savings can be achieved:

1. If it is a straight forward purchase an escrow account should be avoided as the saving can be quite substantial.
2. Traditionally in Berlin the commission for the property agent is paid by the buyer. For a long time 6% plus VAT was custom and practise. With the recent influx of international investors these margins have come under pressure, especially with the agents not assuming any responsibility for the information provided by them.

The cost of financing will depend on many factors like the amount of equity used etc.. There will be cost for Technical Due Diligence and valuation, "handling fee" between 0.25 and 1 % of the loan charged by the bank and entry of the loan into the deeds register. With the right approach and experience there is also a money saving way of doing this.

Naturally there are many more aspects to be considered before making a purchase: Review of the rental contracts, maintenance, ancillary cost to mention only a few of them. Language can be quite an obstacle because an investor can not expect every property manager or care taker to speak English.

Businesses like Berlin Portfolio Ltd and their network of Real Estate Professionals from Notaries to Tax Consultants and Finance Brokers are specialised in assisting international investors in their investment decisions, providing a "Home Base" for their activities in Berlin - before and after the purchase.