Callback

You have questions and would like a personal callback?

Please tell us your phone number and your desired date. We will be happy to call you back.

Market & Figures

Ancillary purchase costs: The shattered dream of home ownership
Horrendous additional fees when buying real estate
To live in your own little house or in an apartment that you own – that is one of the greatest wishes of most Germans. However, the ownership rate of just under 42 % is almost nowhere else in Europe as low as in this country. Only in Switzerland is it slightly lower. This is no comparison with Romania, where the rate is 96 %. In fact, nine out of ten of Europe’s ownership top countries are from the former Eastern bloc, including the former Yugoslavia. Eastern Germany is out of line here with 36 % and even drags down Germany’s overall rate. So what could be the country-specific reasons for the sparse real estate ownership? Could it be the enormous ancillary purchase costs, which are one of the highest in Europe?
Ancillary purchase costs
One of the most popular political demands is for people to own their own homes – either because many politicians know that this is a popular desire or because it is seen as part of their retirement provision. But the government is doing little to make this desire – and thus its Sunday speeches – come true. What’s more, it’s turning the cost screw itself. And the biggest item here is the real estate transfer tax, which has reached horrendous proportions depending on the federal state. Buyers in Brandenburg, Thuringia, North Rhine-Westphalia, Schleswig-Holstein and Saarland pay an impressive 6.5 % of the purchase price when they buy land and property. Only Saxony and Bavaria have relatively low rates at 3.5 %. The other German states, including Berlin with 6 % are at the lower end of the leaders.

For an assumed condominium worth 500,000 euros – for which you can currently get an average of just 116 square meters in Berlin – you would have to pay more than 11 % in ancillary purchase costs in the capital: An unbelievable 55,000 euros would be added to the purchase price – an item that no bank would finance and for which there is no adequate countervalue. We have taken a look at the individual components of this painful bill.

Ancillary purchase costs using the example of a condominium for 500,000 euros in Berlin

Cost types

Percentage

Sum

Cost types

Purchase price

Percentage

 

Sum

EUR 500,000

Cost types

Land transfer tax

Percentage

6 %

Sum

EUR 30,000

Cost types

Real estate agent

Percentage

3.6 %

Sum

EUR 18,000

Cost types

Notary and land registry costs

Percentage

1.5 %

Sum

EUR 7,500

Cost types

Total additional costs

Percentage

11.1 %

Sum

EUR 55,500
table
The land transfer tax is the biggest problem. It is much too high in Germany and much lower in other European countries. It devours the equity of many real estate buyers and cannot be financed through the bank. If it is not to be abolished or lowered, it should at least be reduced or made obsolete for families and/or first-time buyers.

In this context, politics could provide savings – if they want to. But apparently only when it is not a question of their own coffers. For example, new statutory rules on brokerage commissions were introduced in December 2020, which in any case significantly reduce the burden on buyers. Now the brokerage fee is shared between seller and buyer; at least the buyer may not pay more than the seller. However, the effects vary from state to state, as different rates and practices had developed there in the past. In large parts of Germany, the fee had already been split before, but in Berlin and elsewhere it has only been since the end of last year. In the capital, for example, the brokerage fee for buyers dropped from 7.14 % to 3.6 %, and nationwide to 3.5 %.

As before almost only theoretical, but now also practical, this item is freely negotiable – since the ordering seller agrees the price with the real estate agent. Some online platforms even with only just under 2 %, which would amount to 10,000 euros in our example, a further saving of 8,000 euros. This comes already into the proximity of the transfer tax of other countries. The fact that the broker’s commission has fallen for the buyer is a good and correct signal. And strengthens also the respectability of a real estate purchase in itself. The biggest saving is, of course, when the seller directly dispenses with the agent. Unfortunately, this item is thus the only one controlled only by the seller. The others in general cannot be avoided.

additional fees when buying real estate

Property prices are rising – and so are the ancillary costs automatically

The perfidious thing is that everyone – except the sellers, of course – complains about higher prices. But the state earns a percentage of the increase with its land transfer tax. The costs for the notary and land registry entries are also based on the purchase price. They are usually mentioned in connection. However, the invoices come from two sources, contain different items that are not relevant to everyone, and add up to a total amount of around 1.5 % of the purchase price. Land register entries by the land office are an example for the fact that one does not receive a direct equivalent value for its 18,000 euro land acquisition tax, as it also corresponds to the definition of taxes: For land register entries – registration of the conveyance priority notice, the land charge and the owner – therefore again approximately 2,000 euro become due. There is also no escaping the notary. He is mandatory for real estate transactions in Germany. There is not much leeway with him either. Unless, of course, certain services are waived, such as the creation of a land charge or a notary’s escrow account.

Where can you save?

If you already don’t know how to finance your own residential property – the 55,500 euros in ancillary costs don’t make it any easier to realize. The only way to save money is to buy your house or apartment in Saxony or Bavaria and have the seller sell it directly. Then it is possible to save 12,500 land tax and 18,000 euro brokerage, altogether altogether enormous 61 % of our calculation. Of course, as a buyer, you can’t freely choose either. After all, you usually want to live in a certain place. Incidentally, no one should get the idea of declaring the official purchase price lower in the contract in conjunction with the seller in order to make substantial savings on all ancillary costs. This is strongly discouraged. A sales contract becomes null and void.

Have you done everything right? Have you financed the purchase price and paid the ancillary costs? Then your dream comes true. But if, after years or decades, you have finally repaid the loan and would like to cancel the land charge, you will have to incur further costs: this is also impossible without a notary, even if it is a formalized standard procedure; after all, the financing bank has sent the cancellation approval. Of course, the “cost collection agency of the judiciary”, as it is called in Berlin, also holds out its hand once again. Usually 0.2 % of the land charge. The fact that one has diligently paid land tax for years does not help here either.



We use cookies to provide you with the best online experience. By agreeing, you accept the use of cookies in accordance with our Cookie Policy.

Privacy Settings saved!
Privacy settings

We use cookies to provide you with the best online experience. By clicking "Accept all services", you agree to them (revocable at any time). This also includes your consent according to Art. 49 (1) (a) GDPR. Under "Settings or reject" you can change your settings or reject the data processing. You can change your selection at any time under "Privacy“ at the bottom of the page.

These cookies are necessary for the functioning of the website and cannot be disabled in our systems.

In order to use this website we use the following technically required cookies
  • wordpress_test_cookie
  • wordpress_logged_in_
  • wordpress_sec

Decline all Services
Accept all Services