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Buying a Property in Germany

Investment potential

Berlin is considered the city with the lowest property prices in Europe – in fact, they are currently around a tenth of those in London. Therefore experts believe that prices in Germany can only go one way, and that’s up. Investing in Germany however is seen as a long-term investment in regard to capital growth, as this is pegged to the somewhat fragile economy.

If you are hoping to make solid rental returns, however, then it’s a different story. Thanks to the German penchant for renting, yields in the larger cities can reach eight to ten per cent. This is a good return on a relatively low investment, and it’s unlikely that you will ever have a vacant property for long – provided that you are offering good quality, affordable accommodation.

Be aware however that, due to the lack of locals entering the property market, it could take some time to sell your German home – a problem that could cause financial difficulty if you needed to release equity in a hurry.

Health and education

Education in Germany is free, and is compulsory for children from the ages of six to 18. The academic standard is very high, and as a result many expatriate parents send their children to local schools. Having said that, there is a large choice of international schools available, with the major cities of Frankfurt, Munich, Hamburg, Berlin and Dusseldorf all boasting one. There is also a prep school in Bonn which is run by the British Embassy – fees for all of these, however, vary so it’s important to do your research.

Medical treatment is of a high standard, with Germany having the highest ratio of hospital beds to population in the EU. Treatment costs for workers are covered by social security insurance, but you will have to pay for any dental work and prescription medicines. If you are not covered by the German social security scheme it is essential that you take out private health insurance – although your European Health Insurance Card may entitle you to a refund.

Transport

Getting to Germany is easy with a range of low-cost carriers such as easyJet, KLM and Ryanair all flying there on a frequent basis. Internal flights are also available, but the most popular form of transport once in the country is road, with all of the major cities linked by the Autobahn. While there is no official speed limit for these motorways, a maximum speed of 130 kilometres per hour is generally acceptable. In the cities themselves, traffic congestion can be a problem, and speed limits are 50 kilometres per hour. On all other roads, including dual carriageways, 100 kilometres per hour is the maximum speed.

You are entitled to drive in Germany on your British licence for an unlimited time, but there are some minor differences in road laws. For example, drivers must carry warning triangles at all times, and the maximum level of alcohol allowed in the system is 50 milograms per 100 millilitres of blood.

The public transport system is better in the West, but most cities offer a comprehensive service. The train service is reasonably priced and reliable, but connections in rural areas can leave something to be desired.

And finally…

Buying a property in Germany suits two types of purchaser – those who are moving to the country and those after a long-term investment. Should the government decide to push this nation of renters into a home ownership culture, then owners of German property would be in an excellent situation to capitalise on the supply/demand ratio.

There is a risk however that the recently recovered economy could collapse once again, leaving you somewhat high and dry. Tenants also have strong government support, for example it is illegal to evict a single mother even if she refuses to pay the rent, so you could be left with an additional mortgage to pay should anything go awry.

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Page 1: Why Germany?
Page 2: Finance
Page 3: Investment potential

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