This overview explains key terms for the real estate market in Germany and provides guidance for prospective buyers and investors.
In addition to the purchase price, additional costs play a significant role in real estate transactions. Buyers should expect to pay the following incidental costs: real estate transfer tax, notary and land register fees (see: Notary Costs), brokerage fees (see: Commission), and bank fees (e.g., processing fees and interest when financing is involved).
Typically, unit owners pay a monthly service charge to the homeowners' association. At the end of the fiscal year, an annual statement is prepared as a simple income and expenditure report listing all actual income and expenses. Individual statements are also issued for each unit, with costs allocated according to pre-defined distribution keys. Like the utility bill in rental situations, this may result in either an additional payment or a credit.
An annuity is the annual repayment amount for a granted loan, consisting of interest and principal. Many mortgages are structured as annuity loans, and repayments can be scheduled monthly, quarterly, semi-annually, or annually, depending on the agreement. With a constant annuity, the ratio of interest to principal gradually shifts. Interest is only paid on the remaining debt, which decreases over time through the principal repayments. As a result, the interest portion decreases while the principal repayment portion increases.
An architect plays a crucial role in the creation of buildings. They plan, design, and shape various types of structures (residential buildings, public facilities, industrial sites, etc.). In many cases, they also supervise construction and work closely with structural engineers, especially on complex projects. Thus, the architect is a key figure in the technical, economic, and aesthetic planning of a construction project. Their responsibilities often range from preliminary planning to final project supervision. In Germany, the title 'architect' may only be used by individuals listed in the register of a Chamber of Architects. Besides an architecture degree, at least two years of professional experience are required for registration.
Architects' fees are based on the official scale of fees for architects and engineers (HOAI). This regulation is based on the law governing services provided by architects and engineers. The fee calculation is mainly determined by a fee rate and specific fee zones. The individual service areas are organized into phases according to the HOAI: basic evaluation, preliminary planning, design planning, approval planning, execution planning, preparation of contract award, participation in awarding, site supervision, and project support.
The English term 'asset' originates from the financial world and generally refers to valuable items or assets. These include, for example, currencies, stocks, or real estate. The term can also have other meanings: the total assets of a company, core business competencies, or content in content management systems.
BIM stands for Building Information Modeling and refers to a specialized working method that uses software to facilitate integrated planning, construction, and operation of buildings. The structure is created as a virtual model, and all relevant building data is digitally recorded.
Bridge financing is a banking term referring to short-term funding used to cover financial gaps. It is typically applied when final financing is already secured but temporarily inaccessible—for instance, when a home savings contract is not yet ready, capital is tied up, or the sale of another property is pending. Bridge financing usually spans one to two years.
In real estate transactions, an agent can act under various types of agreements. The brokerage agreement forms the legal basis of the relationship between the client and the real estate agent, such as for marketing a property. There are three main types: non-exclusive agreement, exclusive agreement, and qualified exclusive agreement.
In Germany, a building encumbrance is a public-law obligation of a property owner toward the local building authority, as regulated by the building codes of most federal states. The owner is required to tolerate, carry out, or refrain from specific actions concerning the property. Once entered in the register of building encumbrances, it becomes legally binding. In the event of a property sale, building encumbrances transfer to the new owner. The nature of the restriction depends on the type of encumbrance (e.g., consolidation encumbrance, construction boundary encumbrance, setback area encumbrance, etc.).
According to the Energy Saving Ordinance (EnEV), landlords and property owners are required to present a building energy certificate to prospective buyers or tenants at the latest during the property viewing (see also: Energy Performance Certificate). Failure to comply is considered a regulatory offense and may result in a fine of up to 25,000 euros.
Once a building application is submitted to the building authority, the responsible officer creates a building file. This file contains all relevant documents concerning the construction project. Alongside the application itself, the file includes items such as floor plans, construction drawings, building permits, and correspondence with relevant authorities. Inspection of the building file can be requested if needed. If key documents such as floor plans are missing before a sale, reviewing the file can be helpful for property evaluation.
The request must usually be made in writing, as the file must be retrieved from the archive. At a minimum, a phone inquiry in advance is recommended. Only individuals who can prove a legitimate interest are authorized to access the file. This may be shown through written proof of ownership such as a land register excerpt, a certificate of inheritance, or a notarized purchase agreement. Third parties such as real estate agents can also request access but must additionally provide written consent from the property owner. The file can be reviewed at the premises of the relevant building authority for a fee, and copies may be made for an additional charge.
Building land refers to land areas that are suitable for development based on their natural characteristics and legal prerequisites. The term can refer to individual or multiple connected parcels. A parcel is legally considered building land if it lies within an already developed area or is explicitly designated in a development plan. Whether development is permitted largely depends on the level of infrastructure and services available.
A building permit or construction approval is the official written consent by a building authority confirming that a construction project complies with public law regulations. It is subject to specific conditions and is valid for a limited time, usually three years. For private construction projects, the building regulations of the respective federal state apply, so deadlines and conditions may vary. Unauthorized construction can lead to serious consequences such as hefty fines, construction halts, or even demolition. Since construction law has no statute of limitations, unauthorized buildings have no grandfathered legal status.
A building permit is generally required for the construction, alteration, change of use, or demolition of a structure. However, not all projects require a permit; in many cases, a simplified approval exemption procedure may suffice. The building codes of the individual federal states contain detailed regulations on this matter.
A building plot is a developed parcel of land on which construction is permitted. Typically, it refers to land that has not yet been built upon. In contrast, the term 'building land' is used more generally in development plans to describe an area consisting of multiple buildable plots (undeveloped, serviced, and with building rights). Several factors are crucial for converting a property into a building plot, including the development plan, a soil survey, and the availability of infrastructure. The market value of building plots is generally estimated using standard land values and expressed in euros per square meter.
The cadastral map, also known as the land register map or parcel map, is a scaled official document showing all land parcels in a municipality. It displays the locations of all plots, roads, and buildings. Each parcel is identified by a number, which also appears in the land register. Property boundaries can be determined from the map, and a property may consist of one or more parcels. Cadastral and surveying offices are responsible for creating and updating these maps. Today, analog cadastral maps have largely been replaced by digital versions, recorded in the Official Cadastral Information System (ALKIS) as automated cadastral maps (ALK).
There is no single legally binding standard in Germany for calculating living area, but the following guidelines are commonly used:
Results may vary depending on the standard applied. Areas with a ceiling height of 2 meters or more are counted fully (§ 4 WoFIV). Areas between 1 and 1.99 meters count at 50%, and those under 1 meter are excluded. Areas under stairs or with sloped ceilings may also be excluded. Garages, laundry rooms, heating rooms, cellars, and attics typically do not count toward living space. Balconies and terraces are counted at 25-50%, while heated conservatories and pools are fully included. Unheated versions count at 50%. Recessed niches are included only if deeper than 13 cm and floor-level. Chimneys, columns, or pillars taller than 1.5 meters and over 0.1 m² in base area are excluded.
The certificate is mandatory for converting multi-family houses for the purpose of marketing them as individual condominiums. Under German law, the creation of apartment or partial ownership is only permitted if self-containment is present. In the case of new construction or the division of a multi-family house into condominiums, individual residential units can only be sold if the self-containment of the respective apartment has been certified in advance to establish apartment or partial ownership. The certificate of self-containment is therefore essential for the division of a multi-family house and for the creation of individual land register records. The responsible building authority is in charge of issuing this certificate (see § 7, Section 4 of the Condominium Act - WEG). However, each federal state is free to adopt different regulations and delegate the issuance of the certificate to construction experts.
The comparative value method is one of the three main approaches to real estate valuation, alongside the income and cost methods. It is especially useful for undeveloped plots, single-family homes, or condominiums.
In this approach, a property's market value is determined by comparing it with actual sale prices of similar properties, considering factors like location, plot characteristics, and usage. A sufficient number of comparable sales is essential for this method to be effective. If such data is lacking, an indirect method may be used, drawing on past sales data and property value databases. Adjustments may be made for modernization needs, orientation, or usage rights.
The construction description is typically an essential part of the building contract. It provides a detailed description of the services to be performed by the developer and includes precise specifications of materials and their quality. Furthermore, it documents the type, size, shape, and features of the property. A concrete and specific description is crucial to ensure planning certainty for the buyer. The construction description also plays a key role in loan approvals by banks.
The main task of construction supervision is to ensure the proper execution of construction work. This term applies to two areas of responsibility: supervision by the building authority and site management on behalf of a construction company or developer. According to the Official Scale of Fees for Architects and Engineers (HOAI), the terms site management, construction management, and object supervision are considered synonymous for supervision conducted by either the client (developer) or the contractor (construction firm).
In legal terms, conveyance refers to the mutual agreement between buyer and seller concerning the transfer of real property. To transfer ownership, a formal agreement must be declared by both parties before a notary (see §§ 873 and 925 BGB). Conveyance is legally effective upon its entry in the land register and is typically handled by the notary along with the purchase agreement. The agreement for transfer of ownership must be unconditional, although the parties may contractually agree that the registration of ownership occurs at a later date.
Since it can take time for the land register to be updated, a priority notice of conveyance is used to secure legal rights for both parties (see § 883 BGB). This notice names the buyer as the new owner and secures the future conveyance. It is recorded in Section II of the land register. As a result, the seller can no longer modify entries in the land register or sell the property to another buyer.
This category includes premium properties located in good to excellent areas, in top condition, and with minimal vacancy risk. They are typically new builds or high-quality existing properties. Characteristics include high property quality, long-term lease agreements, and excellent maintenance. The expected return is usually derived from a stable cash flow rather than significant appreciation. Core properties are primarily suited for conservative investors seeking stable returns with minimal risk.
Core+ properties are similar to core properties but with slight limitations. They are typically not in top-tier locations and may show minor maintenance needs. Compared to core properties, they carry a low to moderate risk profile. The cash flow is less predictable and these properties often require investment in deferred maintenance or light upgrades. There is potential to enhance returns through improvements, repairs, or by attracting better tenants. Investors usually pursue a long-term investment strategy.
When establishing residential or partial ownership, the property owner must submit a one-time Declaration of Division to the land registry. This document declares the division of property ownership into co-ownership shares. According to § 29 GBO, notarized certification is generally sufficient, but a notarized deed is usually issued. The Declaration of Division specifies how the property is divided into co-ownership shares, each linked to separate ownership of a residential or non-residential unit. It also typically defines which building parts are considered common property and may assign exclusive usage rights. The legal basis for this is § 8 of the German Condominium Act (WEG). The declaration establishes essential rights and obligations for the co-owners.
When a loan is fully repaid, property owners can request the deletion of the land charge recorded in the land register. To do this, a deletion consent is required. This document confirms that the creditor of the land charge agrees to its deletion (see § 875 BGB). A notary usually prepares the document and submits it to the responsible land registry office. The deletion consent must clearly indicate both the application (see § 13 GBO) and the consent (see § 19 GBO). For liens on property, the landowner’s approval is also required (see § 27 GBO).
The depreciated value refers to the current value of land, apartments, or houses as of a specific date, and this value can change over time. Important factors in determining the depreciated value include the age of the property, structural changes, and developments in the location. In the real estate sector, the term is often used colloquially but generally refers to what is more accurately known as the market value (Verkehrswert).
The term Design-Build refers to a specific project delivery method used in the construction industry. It encompasses the entire process of realizing a building project from a single source. In the Design-Build model, the client and contractor work together from the outset, laying the foundation for a project delivered on time and within budget. The design-build contractor is responsible for all phases of the project. Clients typically benefit from shorter construction times and other advantages in Design-Build projects.
Developers are companies that build residential and commercial properties for later sale at their own financial risk. They handle the planning of the entire construction project but generally do not carry out the construction work themselves. Instead, they commission contractors or construction companies to perform the work. The German Trade Regulation Act (GewO) defines the legal framework for companies operating as developers. The Real Estate Agent and Property Developer Ordinance (MaBV) regulates the payment procedures in the purchase of a property from a developer. Upon sale, both the property and the land or equivalent legal right are transferred from the developer to the buyer.
Developer sales essentially serve as a link between the developer and the buyer. Especially for large-scale development projects, a real estate agent or agency is often involved as a sales partner. This offers the developer various advantages, such as a professionally tailored marketing strategy.
The development plan is a regulatory framework that defines the construction and other uses of a precisely defined part of a municipality using drawings, colors, and symbols. It specifies construction usage based on factors such as floor area ratio, building height, and number of stories. The development plan must be observed in any construction project. As a rule, development plans are derived from the land use plan (see § 8 Sections 2-4 of the Federal Building Code - BauGB), which applies to the entire municipality.
A development plan typically consists of a drawing and a written section. These plans are generally accessible to the public and can usually be viewed at the relevant municipality. In addition, the Land Use Ordinance defines the types of building zones (residential, mixed-use, commercial, etc.) and their specific purposes. Planning municipalities are bound to these definitions when determining buildability. § 9 of the BauGB clearly outlines the possible contents of a development plan. There is a distinction between a simple and a qualified development plan. To serve as a legal basis, a qualified development plan must at minimum specify the type of land use, permitted building density, buildable area, and local traffic areas.
In individual cases, planning obstacles may be resolved by granting exceptions or exemptions, provided the development plan allows it. Otherwise, the developer can only request a plan amendment from the municipality. However, there is no legal entitlement to such a change. If no development plan exists or there is uncertainty regarding the project, a preliminary building inquiry is advisable.
Disagio is a term mainly used in finance and refers to a deduction from the nominal value of a given amount. In the context of a property loan, the disagio is the difference between the approved loan amount and the actual amount paid out. The borrower therefore receives less than the full loan amount. Essentially, the disagio functions as a lump-sum interest prepayment.
A district (Gemarkung) is a cadastral unit used in both the land register and the cadastral system. It typically consists of several plots or parcels, and the number can vary depending on the size of the municipality. The entire country is divided into districts, plots, and parcels, each assigned an individual number and recorded in the cadastral system. In Section I of the land register, the district in which a property is located is recorded.
The energy performance certificate provides important information on a building’s energy efficiency and is intended to allow buyers or tenants to compare different properties. It is mandatory for new buildings, modifications, or extensions under the Energy Saving Ordinance (EnEV). According to disclosure requirements, it must be presented to prospective tenants or buyers without being requested, no later than at the time of viewing. There are two types:
This certificate is based on the calculated energy demand. It can be issued for multi-family buildings with a maximum of four apartments, older buildings (built before 1977), or buildings that do not meet the 1977 Thermal Insulation Ordinance (final energy value greater than 200 kWh/m²a).
This certificate is based on the actual energy consumption of residents over the past three years, as determined by utility billing data. It may be issued if the following conditions are met: the building has at least five apartments, the building permit was issued after November 1, 1977, and the building meets the 1977 Thermal Insulation Ordinance.
Equity capital is required to finance a real estate purchase. The amount of available equity plays a key role when calculating financing needs for a loan. How much equity is available depends primarily on the buyer’s income and assets. Total equity often includes multiple components, such as existing property, securities, and savings. At least 20 to 30 percent of the total acquisition costs should ideally be covered by equity. The more equity available, the lower the loan amount that must be borrowed.
Under German real estate law, the exclusive contract or sole agency agreement is an exclusive contractual relationship between the client and the real estate agent. Unlike a non-exclusive agreement, only one agent is authorized to market the property. A distinction is made between a simple and a qualified exclusive contract.
The simple exclusive contract includes terms for specific offer conditions and explicitly excludes the right to engage additional agents. This creates an exclusive contractual relationship between the signing parties. However, the client retains the right to market the property themselves.
In addition to the provisions of the simple version, the qualified exclusive contract also excludes self-marketing. In this case, the seller is not permitted to market the property independently and delegates the entire marketing process exclusively to the appointed real estate agent.
An exclusive use right (Sondernutzungsrecht) entitles a unit owner to sole use of a specific part of the common property—such as a garden area, parking space, or basement—excluding all other co-owners. These rights must be legally defined and recorded in the property documents.
An exposé is the detailed description of a property for sale. It serves as an essential tool for a successful real estate transaction and includes all relevant information about the property. In addition to a comprehensive description and key facts (size, location, year of construction, etc.), it also contains floor plans, site plans, and representative photos.
The commission or brokerage fee for a successful real estate transaction is calculated as a percentage of the sale price. In property sales, there are three possibilities: internal commission (paid by the seller), external commission (paid by the buyer), or a combination of both. The external commission refers to a fee that is borne by the buyer.
The floor plan shows the spatial layout of a house or apartment in two-dimensional form. This bird's-eye view of individual floors depicts both interior and exterior walls as well as important details such as the position of windows and doors. The term refers not only to the drawing itself but also to the spatial conditions it represents, including size, layout, and room arrangement. Floor plans play a key role in property sales and are essential for property analysis alongside construction plans. Older buildings may not have a floor plan; in such cases, one can be requested from the local building authority. As part of a property exposé, the floor plan illustrates potential uses for the rooms and should always be compared to actual on-site conditions during viewings.
The handover date is the moment when a seller transfers a property to the buyer. From that point on, all usage rights, obligations, liabilities, and safety responsibilities shift to the new owner (see § 446 BGB). The purchase contract should clearly define the handover date to clarify the distribution of responsibilities, such as snow clearing in winter.
At the handover, both parties should be present or represented by a qualified real estate agent. Any visible defects should be documented in a handover report and witnessed. The seller must also transfer all relevant documents to the buyer, including floor plans, property tax notices, and insurance records.
The handover report, also called an acceptance protocol, documents the condition of a property at the time of handover to a tenant, landlord, or buyer. It should detail all damages and defects. This documentation helps prevent future disputes by proving the property's condition at the time of transfer. Though not legally required, it is strongly recommended during every move-in, move-out, or sale.
The Fee Structure for Architects and Engineers (HOAI) is a German legal regulation. It governs the fees for services provided by architects and engineers and applies to anyone working on domestic engineering projects in Germany, regardless of their educational background. The current version (as of January 2021) no longer includes binding minimum and maximum rates, meaning that architects’ and engineers’ fees can now be freely negotiated.
Home staging is a targeted real estate marketing strategy used to better appeal to potential buyers, leading to faster sales and higher selling prices. To attract a broad buyer base, the property is professionally furnished and decorated. Minor cosmetic repairs or landscaping work may also be carried out.
ImmoWertV is the abbreviation for the German Real Estate Valuation Ordinance, a legal regulation that provides the basis for property valuation. In Germany, three methods are generally used for valuation: the Comparative Approach, the Income Approach, and the Cost Approach.
The income approach is, alongside the comparative and cost approaches, a standard valuation method for real estate. It is primarily used to assess rented residential properties, commercial buildings, and mixed-use properties. The basis is the income value, which is calculated from the land value and the total generated income. The land interest is determined by multiplying the land value by the property yield rate—a percentage that reflects the typical market return on property values. It is a key factor in capitalizing future revenues and expenses.
The property yield rate is derived from the purchase price data collected by expert committees. A higher rate reduces the market value of a property, as the land interest is deducted from the net operating income. The net income is the annual rental income minus applicable management costs that cannot be passed on to tenants. The remaining useful life of the building is also a critical factor. The net building income is multiplied by a value factor based on the yield rate, and any necessary renovation needs reduce the value accordingly.
Land awaiting development refers to plots for which future use as building land is expected based on specific characteristics. This is often indicated in the land use plan. The term is defined in § 5 (2) of the German Real Estate Valuation Ordinance (ImmoWertV). Accordingly, development of the land is expected with sufficient certainty based on concrete facts.
A land charge is similar to a mortgage but is not tied to a specific claim. It is a type of real estate lien. According to § 1191 BGB, it allows a property to be encumbered to secure the repayment of a debt. There are two types: book land charge and document land charge. Both are entered in Section III of the land register, but a document land charge additionally requires issuance of a land charge certificate. In practice, lenders typically prefer the book land charge as a means of securing loans.
The land register is a public register in which all developed and undeveloped properties within a municipal district are recorded. Each property has its own land register sheet, which contains important information about ownership as well as rights and encumbrances associated with the property.
A land register excerpt is a copy of all entries in the land register for a specific property. It may be required in various situations, such as selling a house or financing real estate.
The living area is a key factor in determining both rental prices and property values. It represents the total usable interior space within a dwelling. However, not all floor space qualifies equally, and room height is also relevant. Ideally, the living area is based on official floor plans. If the reported area is inaccurate, buyers or tenants may have grounds for legal claims, especially when deviations exceed 10%.
A loan is a form of credit used to finance a purchase (property, car, etc.). The loan agreement stipulates that the lender provides the agreed loan amount to the borrower for a fixed period. In return, the borrower commits to repaying the amount with interest, typically in the form of installments. These installments consist of an interest and a principal component, and payments are made monthly, quarterly, semi-annually, or annually, depending on the agreement.
The term 'Hausgeld' refers to the monthly advance payments made by an owner to the homeowners' association (WEG). It covers specific costs such as operating expenses (waste disposal, electricity, etc.), administration, and maintenance.
According to § 14 of the Condominium Act (WEG), unit owners are required to maintain the parts of the building that belong to their separate ownership. When it comes to common property, the maintenance obligation applies to all members of the homeowners’ association. Maintenance and repair must be clearly distinguished from modernization and structural changes.
According to § 21 Section IV of the Condominium Act (WEG), each unit owner has the right to request the establishment of a maintenance reserve. This can help prevent liquidity issues in the event of major repairs, such as facade or roof renovations. Payments are usually made in installments and are included in the owner's monthly service charge.
The market value (or Verkehrswert in German) is not the same as the actual sale price. It reflects the estimated price a property would likely achieve in a fair sale under current market conditions. This value is usually determined by a certified appraiser and provides a basis for setting an asking price. However, the final sale price ultimately depends on the buyer’s willingness to pay.
A market value appraisal is the most comprehensive method of determining a property's market value. It is often required for banks, insurance companies, tax authorities, or legal disputes and is conducted by sworn or certified appraisers. The resulting report includes all relevant property documentation and evaluates legal and physical aspects of the property, as described in §194 of the German Building Code (BauGB).
Such appraisals are typically used in court proceedings, divorces, inheritance and asset divisions, or when calculating business assets. The appraisal reflects the market value as of one or more valuation dates, and fees apply for this certified service.
There are key differences between renovation, refurbishment, and modernization. According to § 555b BGB, modernization refers to structural changes aimed at improving living conditions, enhancing sustainability, increasing energy efficiency, or significantly raising the usability of a property. This could include installing a new heating system or adding modern exterior insulation.
The non-exclusive contract is a commonly used form of brokerage agreement. Unlike the exclusive contract, it allows the seller to engage additional agents or to market the property independently. However, this type of contract carries a risk of lower success. If many agents are offering the same property, it may confuse or even deter potential buyers.
Under § 1 (3) of the Condominium Act (WEG), non-residential unit ownership (Teileigentum) refers to individual ownership of spaces not intended for residential use (e.g., offices or retail units). The ownership shares in the common property remain unchanged. The only difference from residential unit ownership is the intended use of the space. A declaration of division is required to establish this legal form.
In Germany, notarization is mandatory for real estate transactions (see § 311b BGB). Oral agreements or private written contracts do not meet the legal form requirements and are therefore void under § 125 BGB. This notarization requirement is intended to protect buyers and sellers from rushed decisions. It also ensures that complex legal matters are properly recorded. The exact procedure is governed by the Notarization Act (BeurkG). According to § 17 BeurkG, notarization is one of a notary’s official duties. During the appointment, the notary reads the contract aloud, which is then approved and personally signed by all parties involved. The notary then also signs the contract and affixes their official seal. The original document is entered into the official notarial record and remains with the notary.
A notary primarily carries out certifications and notarizations of legal transactions, with a main focus on the following areas:
When buying real estate, notarization of the purchase agreement is mandatory, and the notary also applies for changes in the land register. A notary must be impartial and independent and is bound by a duty of confidentiality. The state justice administrations supervise notaries.
A notary appointment is required to officially notarize the real estate purchase agreement under § 311b BGB. The parties involved must verify their identity with an ID card or similar document unless personally known to the notary. Legal entities (e.g., GmbH, registered associations) must present proof of representation authority.
The notary escrow account is a special type of trust account, similar to a general escrow account. In real estate transactions, it is used to securely hold the agreed purchase price. This process protects the interests of both buyer and seller. The notary manages the funds in trust. Due to § 57 of the Notarization Act (BeurkG), this type of account is now only used in exceptional cases, where there is a legitimate need for security. Additional notary fees apply for the escrow service.
According to § 17 (1) Sentence 1 of the Federal Notarial Code, notary fees include charges for notarial services, disbursements, and VAT. These fees are regulated by law and cannot be determined by the notary. For property transactions, fees are based on the purchase price and amount to approximately 1.5-2% of the assessment basis. A real estate purchase agreement must be notarized; otherwise, it is void under § 311b BGB. Additional land registry fees apply for registering a land charge, which are also included in the total notary fees for buying a house or apartment.
This category includes simple properties located in rather moderate areas. Upon acquisition, little to no immediate cash flow is expected. High vacancy rates and significant need for repairs are common. These investments aim to achieve strong value appreciation through renovation, densification, or demolition and new construction, with the goal of selling at a substantial profit.
A parcel is a defined and officially surveyed section of the earth’s surface. It is the smallest unit in the cadastre and is listed in the cadastral map with a unique identifier. A property is often identical to a parcel but may also consist of multiple parcels. In addition to being recorded in the Official Cadastral Information System (ALKIS), details such as the district designation and parcel number are noted in the land register. If necessary, the exact location and boundaries of a property can be determined using both the cadastre and the land register.
A partially serviced plot is not yet fully developed for construction. For example, the plot may be connected to the road network, but electricity and water infrastructure may still be lacking. Full development is required before building permission is granted.
Personal use (Eigenbedarf) is a term from tenancy law and refers to a commonly cited reason for termination by landlords. The legal basis for termination due to personal use is found in § 573 Section 2 No. 2 BGB. Accordingly, a landlord may only terminate a tenancy due to justified personal need. This applies if the landlord or a privileged person (e.g., children, stepchildren, spouse, parents, nieces and nephews, in-laws, or a caregiver) intends to use the property for residential purposes. Other individuals, such as cousins or former spouses, are not eligible for this claim.
Portfolio management involves organizing and overseeing an investment portfolio in accordance with the investor's objectives. It is based on a thorough analysis of the investor's individual financial and capital situation.
A preliminary building inquiry is used to determine whether a planned construction project is likely to be approved before a formal building application is submitted. The developer submits a request to the responsible building supervisory authority, which reviews the documentation to assess compliance with building regulations. The authority then issues a preliminary decision, which has a binding effect for the subsequent building permit process.
In a condominium owners' association, each unit owner has the right to demand proper administration of the property. § 21 (5) of the Condominium Act (WEG) provides examples of what constitutes proper administration in the interest of all owners:
If the condominium association or manager fails to comply with an owner's request for proper administration, the owner may contact the local district court. Under § 21 (8) WEG, the court may order a necessary measure based on equitable discretion.
In the real estate industry, the term Property Management refers to a subfield of real estate management. It involves providing various services related to the operation of a property on behalf of the investor. The primary focus is on the operational phase of a property, aiming to implement a defined asset strategy as efficiently as possible with a focus on maximizing returns.
Property tax is levied on land ownership and the buildings erected on it. The municipalities benefit from this tax and are responsible for setting the assessment rate, which determines the actual tax amount. It is calculated based on the assessed value of the property, from which the basic tax amount is derived using a tax rate. The municipal multiplier is then applied to this amount. Property tax A applies to agricultural and forestry land, while property tax B applies to all buildable or non-agricultural properties.
Property tax in Germany is due annually. The tax office issues a property tax base notice, which is used by the relevant municipality to calculate the property tax. The municipality then sends a property tax assessment notice to the owner to collect the amount due.
Determining the value of a property is essential for setting a realistic asking price before selling. Real estate experts use various methods for valuation, including the income approach, cost approach, and sales comparison approach.
PropTech, short for Property Technology, refers to the digital transformation of the real estate industry. This includes digital services, technologies, and products that aim to optimize and streamline real estate business processes.
A sole agency agreement is an exclusive brokerage contract that excludes the engagement of other agents. In its qualified form, it also prohibits the owner from marketing the property themselves. Even friends or family members interested in the property must contact the appointed agent. This ensures exclusive marketing rights are reserved for the commissioned broker (see also: Sole Agency Agreement).
Quality assurance in real estate is essential for maintaining construction or renovation standards. Independent experts—often architects or structural engineers—conduct evaluations to identify potential defects or quality issues. A comprehensive quality assurance process helps prevent unexpected costs and ensures long-term asset value.
The real estate agent acts as an intermediary between seller and buyer or landlord and tenant. They offer a variety of services related to property sales, purchases, rentals, and tenant searches. These include property brokerage, contract consulting, property valuation, and more.
For many investors, real estate is particularly attractive as a form of capital investment. An investment property is primarily purchased for investment purposes and is intended to generate secure income through rent and appreciation in value. Alternatively, real estate funds offer another investment option. Open-ended real estate funds involve a large number of investors and invest the capital in multiple properties. Closed-end real estate funds, on the other hand, have limited shares and a restricted number of properties.
The following documents are typically required when selling a property:
For condominium units, additional documents may be required:
Real estate transfer tax is levied on property purchases and is based on the purchase price. This state-level tax is governed by the Real Estate Transfer Tax Act, and states may pass it on to municipalities. The tax rate varies by federal state and currently ranges from 3.5% to 6.5% of the assessed value. Registration of the new owner in the land register only takes place after the tax has been paid and the tax office has issued a clearance certificate. This tax is considered part of the incidental purchase costs and should not be confused with property tax.
An alternative to the income approach or comparative value method, real estate valuation can also be carried out using the cost approach. This method is typically used for condominiums as well as owner-occupied single-family or two-family homes. The first step is to determine the current costs that would be incurred for a new construction of the building. These hypothetical construction costs then form the basis of the calculation.
The following factors are relevant for the cost approach:
In addition, individual factors must be taken into account in the cost approach, such as the type of property, level of fittings, structural defects, or specific land characteristics such as a slope.
In most federal states, the register of building encumbrances records public-law obligations (building encumbrances) of property owners. It is maintained by the relevant building supervisory authority.
The registration certificate serves as proof of a person's current residential address and is often required when no national ID card is available. This may apply to individuals who only possess a passport. It is also useful for foreign nationals residing in Germany. The extended certificate includes additional details such as marital status and nationality.
In tenancy law, renovation typically refers to cosmetic repairs. Unlike modernization or restoration, renovation focuses on improving visual appearance rather than fixing structural defects. Common tasks include painting or minor repairs aimed at enhancing living comfort and aesthetics.
The following documents are typically needed when renting out a property. In addition to legally required paperwork, further documentation may be useful. The list below provides a general guideline:
Repayment refers to the repayment of a loan. Most property buyers finance real estate through loans, typically using annuity loans. The installment amount remains constant throughout the repayment period, with the interest portion decreasing over time in favor of the principal repayment. The loan contract specifies interest rates, repayment schedules, and other conditions.
A reservation agreement, often found in the context of an exclusive brokerage agreement, commits the broker to reserve a specific property for a potential buyer in exchange for a reservation fee. During the agreed timeframe, the property is not offered to other interested parties.
Restoration in construction refers to eliminating damage or defects and restoring a property or its parts to their original or improved condition. Typical examples include repairing a leaking roof or replacing rotten beams. Depending on the severity of damage, extensive structural interventions may be required.
A right of first refusal gives a person or entity the legal priority to purchase a property if it is being sold. This right is usually recorded in the land register. If a sale occurs, the entitled party can purchase the property under the same terms agreed with the original buyer. The right of first refusal replaces the original buyer in the sales contract. There are different forms of pre-emption rights, including contractual and statutory ones. Real estate-related rights of first refusal are governed by §§ 1094 ff. of the German Civil Code (BGB) and apply only to land or land-use rights.
The right of way allows a beneficiary to pass through or access a property owned by someone else. This right is recorded in Section II of the land register and can be formalized as an easement (for properties, § 1018 BGB), a limited personal easement (for individuals, §§ 1090 ff. BGB), or a usufruct (§ 1030 BGB). A special form is the emergency right of way (§ 917 BGB), which applies when a property lacks access to public roads and a neighboring plot must grant access.
Consumers have a legal right to withdraw from contracts signed at a distance or outside of business premises (see § 355 BGB). Businesses must inform consumers of this right before the agreement is made. This also applies to brokerage contracts made off-premises. Consumers may cancel the contract within 14 days by submitting a timely notice. If no cancellation notice is provided, the period extends to a maximum of 12 months and 14 days (§ 356 (3) sentence 2 BGB).
In real estate investment, properties are often classified into risk categories: Core, Core+, Value Add, and Opportunity. These range from conservative to high-risk investment strategies. Key classification criteria include location, expected yield, tenant structure, and potential for appreciation. As with other asset classes, higher risk typically correlates with higher potential returns.
Secret Sale refers to the discreet marketing of real estate, where properties are not publicly advertised. This approach is often preferred by high-profile sellers or in cases where privacy is important. Brokers rely on a select group of potential buyers and avoid open house events or online listings.
The structure of the land register includes the heading, the inventory, and the three sections.
This section contains important information about ownership. It lists details about the owner (name, date of birth, place of residence), the date of registration, and the basis for the entry (conveyance, inheritance, etc.). If there are multiple owners, their respective ownership shares are also recorded.
Section II records all encumbrances and restrictions, such as rights of residence or usufruct, pre-emptive rights, rights of way, or restrictions on disposal (notations regarding insolvency, foreclosure, etc.). However, land charges (mortgages and land or annuity charges) are not listed here. If the property has already been sold and a priority notice of conveyance has been entered, this is also recorded here. A second buyer can then no longer acquire the property. If a right of residence is registered in Section II, the new owner must assume this right after the sale unless the beneficiary waives it.
The information in Section III is particularly relevant, as this part of the land register lists land charges. It includes mortgages, land charges, and annuity charges, as well as any objections to the corresponding entries.
The security deposit or rental deposit protects the landlord against potential damages and also serves as security for missed rent payments. It must be paid by the tenant and may not exceed three months' rent (excluding utilities). The deposit must also be specified in the lease agreement.
As a term used in property law, self-containment in buildings with multiple apartments refers to the structural separation of one residential unit from other units, as well as from special and communal property. Self-containment is an essential prerequisite for the creation of separate ownership.
To ensure privacy, an apartment must have its own access, which must be reachable either from the outside or via the staircase. Additionally, it must be possible to manage a household within the unit, meaning a kitchen or kitchenette, electricity, water supply, and toilet must be present. Rooms located outside the actual residential unit, such as basement areas or attics, can also be assigned to the unit, provided they are lockable. According to § 3 of the Condominium Act (WEG), garage parking spaces are considered a special case, as they are regarded as self-contained units even without walls, as long as permanent markings define the area. Color markings alone are not sufficient. According to prevailing opinion, this regulation applies exclusively to garage parking spaces and not to open-air parking spaces.
For rooms not intended for residential purposes, the requirements are less strict and are based on the intended use. The requirement for self-containment is stipulated in the building regulations of each federal state. To establish apartment or partial ownership, the Condominium Act, in conjunction with the partition plan, requires the submission of a self-containment certificate.
In rental apartments, tenants typically pay additional operating costs on top of the base rent. According to § 556 BGB, landlord and tenant can agree in the lease that the tenant bears certain operating costs, either through a flat fee or monthly advance payments. Section 556 (3) BGB also requires an annual settlement if advance payments are agreed. Only costs specified in the Operating Costs Ordinance may be passed on to tenants. These are expenses arising from the intended use of the property.
A fully serviced plot meets all development criteria. It is connected to the public road network, electricity and water supply, and the sewage system, making it ready for construction.
The site plan is a key part of the building application. It plays a crucial role in the permit process, serving as the primary document for preliminary decisions, notification procedures, and building permits. Based on the cadastral map, an official site plan is prepared individually for the specific plot. Each site plan consists of a written and a graphic section. The written section includes key information such as the client, neighboring plots, existing encumbrances, building density, plot coverage, floor area, and project-specific details. The graphic section shows a scaled outline of the planned building, including setbacks, roof shape, and pitch.
The official site plan serves as a basis for the object-specific site plan, which is part of the construction documentation. This is usually prepared by the building planner, but can also be requested from the surveying or cadastral office.
According to § 903 of the German Civil Code (BGB), an owner has the right to deal with an object at their discretion and to exclude others from any influence. In the case of sole ownership, only one person holds exclusive control, whereas fractional or joint ownership involves multiple parties. A sole owner independently decides on the use, sale, rental, or leasing of a property. Ownership rights to an object can be acquired through various proofs, such as a purchase contract. Special provisions apply to real estate and land. According to § 891 BGB, ownership of a property is associated with its registration in the land register. If no right has ever been registered or an entry has been deleted, there is legally no ownership. The land register is granted public faith (see § 892 BGB).
The standard land value is an important reference value for determining a real estate purchase price. Based on official sales data, specialized expert committees in each municipality regularly determine average values for areas with comparable location and usage. Additional factors such as location, infrastructure, and development potential are also considered. The determined value always refers to undeveloped land and does not include the value of any existing buildings. To determine the market value of a property, both the land value and the building value must be considered. According to § 196 of the Federal Building Code (BauGB), standard land values must be determined at least every two years.
TGA stands for Technical Building Equipment, considered the most complex aspect of building planning. It includes all installations and systems required for residential use and comfort, such as electrical supply, heating, and other technical infrastructure. These systems must meet high standards, including fire protection and operational safety regulations.
In economic terms, a transaction refers to the exchange of economic goods (such as goods or receivables) between economic entities (e.g., businesses, households, government agencies). A fundamental condition is that both parties benefit from the transaction.
A Turnkey Solution refers to offers, products, or services that are ready for immediate use upon delivery to the customer. The contractor, often acting as the general contractor, is responsible for all phases of the project—from planning to completion—which typically includes hiring subcontractors. These projects are usually tailored to the client's needs.
An unserviced plot is not yet connected to the four essential infrastructure systems: electricity, water, wastewater, and public roads. If a plot is designated for construction but lacks these connections, it is considered undeveloped land.
Value Engineering is a structured method of thinking used to develop innovative projects and services. It is considered a precursor to detailed project planning, aiming to create a functional model that delivers the best possible outcome within a set budget. This method is particularly suited to innovation and large-scale projects involving multiple stakeholders from different disciplines.
These properties are typically located in good to average areas and require significant renovations. Initial cash flow is often low or nonexistent, but there is strong potential for improvement. Common issues include high vacancy rates, poor management, or deferred maintenance. For investors, a deep understanding of real estate, strategic planning, and active oversight are essential. The primary focus is on achieving sustainable value increases by eliminating existing deficiencies.
To avoid a poor purchase decision, a thorough property viewing is essential before buying real estate. Several factors must be considered to allow for a detailed inspection of the building structure and technical systems. Therefore, comprehensive preparation is advisable in advance. The following points should be considered in any case:
For safety, it is advisable when purchasing an existing property to have the costs for modernization and renovation realistically estimated by an experienced professional.
Wealth management refers to long-term investment advisory and asset management services typically offered in the private banking sector. It includes customized financial solutions tailored to high-net-worth individuals across different life stages.
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