Germany inspection trip - need a checklist of what to ask the agent/notary etc.

[devoto]

Off to view some properties in Germany shortly. I would like a comprehensive checklist of all relevant questions I should be asking the agent or notary specifically for this market. I have a list complied but don't want to miss out on some important point that I neglected to think of.

Any general ideas when looking at properties but with specific reference to Germany would be appreciated.

If there is a list in some other post maybe someone could point me to it - I've done a search already with no luck.

Thanks in advance.

Devoto

 

[Galwayboy]

Devoto,
Maybe you could post alittle bit more information with regard to locations which you are going to and your budget and the type of properties (commercial/residential/mixture/single apartments etc).
Maybe these are on your list already but I would be also asking the following questions
1. What is the average square meter price that the property is rented for and how this this compare to rents achievable in the surrounding area's
2. What are the running costs (even though these are generally paid by the tenants). High running costs means higher costs to the tenants and it could be difficult to find new tenants when flats become vacant.
3. Look at the general condition of the building. Windows,plasterwork,roof,stairwell etc.
5. What is the square meter price for the building
4. Look at general area. Does it look rough and is there a lot of graffiti around.
5. In the case of a apartment block that you are considering buying I would be looking for a tenant list and see when each tenant moved in and if there is a lot of tenant changes in recent years. If there is ask why
6. Look at the cellar if there is any to detect any dampness and also look at the piping for gas etc down there.
7. Availablity of public transport would be important. If no metro then what about bus routes
8. Avoid busy streets with a lot of passing traffic if you going for a residential property
9. Has the current owner spent much on up-keep or refurbishments in the last few years
10. Check with him regarding arranging finance (some agents will do this aswell)
11. Haggle on his fee (as you will have to pay it). They will all generally look for 6% + 19% vat which is very high.
12. Look at the contracts that the tenants have to make sure that there is nothing out of the ordinary in them.
13. What does the local government say the rent should be for a particular area (i think the document is called the speicgal-which is produced every year). And how does this compare to the rents on the property that you are viewing
I have purchased in the past in Berlin and am achieving a good solid return (on the rental side). Capital appreciation won't be hectic in germany in the short term so its important to buy in a good area with a decent yield. One that will wash its own face.If its a quick buck your after maybe germany is not the place, as I would view it as a 5 to 10 year play. I'm open to be corrected on an of the above points and welcome anybody else's comments

 

[Persius]

Regarding point 13, "mietspiegel" is the record of standard rent levels for a particular area.

Also ask to see the meeting minutes from the residents association. I forget the name for this book, but the residents association or management agent is obliged to keep these records. They give an indication as to how harmonious or troublesome tennants in the entire block are, or any other issues.

Find out which running costs are passed on to the tenant, and which must be met by the landlord

Find out how rental income is taxed in Germany, and what allowances exist there. If you pay less tax there, then the Irish taxman will be looking for the balance, but you may find out that you actually have to pay more tax in Germany. And also find out about CGT and inheritance law in case (god forbid) you drop dead the week after purchasing.

Find out how the population of the town/city has changed in the last 20 years. Many (mainly eastern) cities are experiencing population decline.

That's all I can think of off the top of my head. There's bound to be more.

 

[Martin77]

Specifically for Germany: given my and my friends experiences as leasees rather than landlords, over and above the lists already given.

Certainly ask about the "Nebenkosten" and maintenance costs of common areas as well as how the residents association functions. This is particularly important where it is pretty usual to have lots of common facilities such as snow clearance, garden maintenance, lifts, as well as a single heating/hot water system for the whole block. Maintenance costs on older property could shoot up if they vote to put on a new roof. And you would be legally obliged to pay your share if the vote goes through. So ask for future budgets too from the management agent, and what your share of any costs would be. And how, if a tenant leaves part way through the year, the hot water usage readings will be taken and apportioned.

Ask about previous tenants and if there are any outstanding and past legal disputes (e.g. Rechtsschutz cases.) Ask about what insurances you require as a landlord e.g. Eigentums-Rechtsschutz, Schneedienst & Haftung. Germans seem to be rather fond of legal action compared to Anglo Saxons. Ask if there are any known reasons why you could not get the required insurances. I read that problems with neighbours and between landlords and tenants are the number 1 & 2 causes of legal cases in Germany. Ask about any sitting tenants and their payment history. You cannot just turf people out in Germany. Definitely get some legal advice about Mietrecht (tenancy laws) and a sample contract (Mietvertrag) There are some off the shelf versions from e.g. [broken link removed] but you really need to understand everything in this in gory detail. German courts normally side with tenants in cases of disputes even when a tenant has failed to pay the rent for months.

Ask about the typical fees of local agents for finding tenants. These can be equivalent of up to three months rental in Germany. Normally these are paid by the tenant, but be aware that this is an extra cost for them on top of what you are asking.

Decide what sort of rental you are looking to provide:
"Kalt" = empty apartment
"Warm" = including heating costs
"möbliert"= including furniture

Be sure to take the differences into account when comparing market prices. e.g. It is normal in Germany for a leasee to provide their own kitchen units and light fittings in a Kalt let. You literally see pipes and bare wires sticking out of the wall in the kitchen when you move in.

Ask about the Hausordnung = the tenants association rules e.g. Ruhrzeit when the kids cannot play on the swings in the afternoon because it is quiet time, who has to clean the corridors or stairways and when. Make sure these are included in your lease contract.

If you get all this sorted in advance and on paper it will definitely save you hassle later. Good luck!

 

[dontaskme]

Property owners pay hausgeld, a sinking fund that can be used for renovations etc.

info here only in German http://de.wikipedia.org/wiki/Hausgeld_(Wohnungseigentum)

AFAIK if one landlord owns the majority of the properties in a block, then they can set the hausgeld for all the other owners in the block.

Also, properties in the former East Germany are still subject to restitution claims from Jews who were dispossessed in the 1930s Nazi era. West Germany made these restitutions much earlier.

 

[Martin77]

AFAIK if one landlord owns the majority of the properties in a block, then they can set the hausgeld for all the other owners in the block.

That depends.

Further on in your Wikipedia source it states that:

Stimmgewicht
Nach § 25 Abs. 2 hat jeder Wohnungseigentümer eine Stimme. Auch ein Eigentümer mehrerer Wohnungen hat in der Wohnungseigentümerversammlung nur eine Stimme (Kopfprinzip). In der Regel wird das Stimmgewicht aber in der Teilungserklärung abweichend geregelt. Häufige Formen sind hierbei
das Wertprinzip: Das Stimmgewicht richtet sich nach den Miteigentumsanteilen. Hierbei kann es vorkommen, dass ein Eigentümer, dem mehrere Wohnungen gehören, die Wohnungseigentümerversammlung beherrscht. Nachteilig ist auch, dass bei größeren Wohnungseigentümerversammlungen das Abstimmungsergebnis aufwendiger festzustellen ist.
das Objektprinzip: Hiernach steht jede Wohnung für eine Stimme. Hier kann es zu Verzerrungen kommen, wenn die Wohnungen ungleich groß sind.

Translated to English to the best of my personal ability, that comes out as:
Voting Rights
According to Section 25 subparagraph 2 every owner has ONE vote at the owners meeting. Even an owner who owns more than one flat has just one vote (headcount principle.) Generally this legal basis right is explicitly over-ridden and the votes are weighted according to the Statement of Division document. Common forms of the division are:
1) the value principle. where the power of the vote depends on the relative (original) value or size of the individual flats. This can cause problems where one owner owns a large proportion of the value and thus dominates the voting. It is also difficult in large owners meetings to determine exactly what weight of votes have been cast.
2) The object principle. Each flat has one vote. This can cause problems when flats are different sizes.

That is why I suggested asking how your share of both common costs AND repair work is divided up between multiple owners. Whatever happens there has to be a formal budget that is prepared in advance and voted on at the owners meeting. In my experience the votes were cast on the basis of a "shareholding" in the overall management company based on floor area. But it is definitely worth checking to avoid getting railroaded by a dominant investor, as you suggested.