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PROPERTY

The new innovations that could help solve Munich’s housing crisis

Bavaria's boom in popularity has made living in and around the metropolis of Munich extremely expensive. But some new design concepts may help ease the problem in the future.

A new residential building and construction cranes in Munich's Freiham district in April 2022.
A new residential building and construction cranes in Munich's Freiham district in April 2022. Photo: picture alliance/dpa | Carsten Hoefer

The popularity of the Bavarian capital and its surrounding areas has resulted in an exorbitant housing market in recent years.

The latest survey by HWWI and Postbank Wohnatlas revealed that Munich is the most expensive city in Germany, with homes costing an average of €9,774 per square metre.

The high costs spill out into the surrounding areas of the city, too, with eight of Munich’s surrounding districts being in the top-ten most expensive areas outside of cities in Germany, according to the HWWI and Postbank Wohnatlas study.

READ ALSO: REVEALED: The German regions where property prices are falling and rising the most

But while the German government has failed to meet its own target of building 400,000 new houses a year to ease the housing crisis, localised initiatives are exploring new ways to provide more affordable living spaces.

A research project called “Einfach Bauen” (just build) by the Rosenheim University of Applied Sciences is currently testing out more efficient design principles on model houses in the municipality of Bad Aibling, around 60 kilometres southeast of Munich, to see if they can be used to create affordable housing. 

Head of the Project, Professor Anna Niemann, said that the scheme adopts a “back-to-basics approach”, with more simplified buildings, using technology to combine good indoor climate and energy efficiency.

As a result, the research has found that 3.1 metres is an ideal floor height for housing, as this allows for more efficient use of vertical space, ample natural light, and a favourable indoor climate. Such findings could help enable the construction of high-quality, affordable housing on smaller floor plans.

READ ALSO: Why Germany is seeing the ‘worst housing shortage in 20 years’

Finding a better way to use space is also a priority for Wolfgang Wittmann, Chairman of the Metropolitan Region Munich Association. He told Handelsblatt that in order to address Munich’s housing problem, it’s necessary to “design the functional space in a way that keeps the region competitive”.

His association believes that alternative office concepts also have a role to play in supporting a thriving metropolitan region. Coworking spaces, which have gained popularity in large cities in recent years, are now being explored as a potential solution. 

The Munich Metropolitan Region Association is currently working with coworking space provider 1000 Satellites to find out whether and which locations from Rosenheim to Ingolstadt are suitable for offering office units so that workers in less central areas would have a shorter commute to a working space outside of their homes. 

The aim is to establish coworking spaces in smaller communities surrounding Munich, which would not only cater to young self-employed workers but also to employees from companies which only have offices in the city centre. 

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PROPERTY

EXPLAINED: What fees do you have to pay when buying a home in Germany?

Few experiences in Germany will take you through the full German bureaucratic, tax, and legal experience the way buying property here will - and there are plenty of fees. Here's what you need to know about extra charges so you don't face a nasty surprise.

EXPLAINED: What fees do you have to pay when buying a home in Germany?

One of the big reasons as to why property ownership is so low in Germany? The fees.

Depending on where you buy your own piece of paradise – you could be on the hook for taxes and fees that add up to over 10 percent of the purchase price! It’s a figure that’s high enough to make some wonder if the investment is worth it – and often used to explain why figures on German home ownership, at around 50 percent – are some of the lowest in Europe.

READ ALSO: Why is home ownership in Germany so low?

Land transfer tax

When you sign a contract to buy property in Germany, you’ll get a letter soon after from your local tax office – telling you how much land transfer tax you have to pay. Such a tax triggers whenever property ownership changes hands in Germany and needs to be paid by the new owner.

It’s calculated based on property value – most often the agreed purchase price – and varies depending on the federal state where the property is located.

The lowest transfer taxes are found in Bavaria – whose 3.5 percent rate is significantly lower than any other Bundesland. Five percent rates apply in Saxony-Anhalt, Mecklenburg-West Pomerania, Rhineland-Palatinate, Bremen, Lower Saxony, and Baden-Württemberg. 

Hamburg and Saxony follow with 5.5 percent rates, whereas Berlin and Hesse start going to the high end of tax rates at six percent.

At the highest end with 6.5 percent rates – lie North Rhine-Westphalia, Brandenburg, Saarland, Schleswig-Holstein, and Thuringia.

You won’t be able to add your name to the land registry – or Grundbuch – until you pay your tax.

READ ALSO: Why property prices in Germany are likely to rise this year

Real estate agent fee

In most German states, you’ll also have to pay your estate agent a commission amounting to about 3.57 percent of the property purchase price.

There are four federal states where this fee is lower though – and even a slightly lower percentage could make a big difference given the amounts involved. Hamburg and Mecklenburg-West Pomerania have commission fees of 3.18 and 3.08 percent, respectively.

At 2.98 percent, the lowest real estate commission fees are found in Bremen and Hesse.

These commission fees are also a reason why it may be an attractive option to buy a newer build property directly from a real estate developer – as you won’t pay any commission if you purchase from the developer directly. Private selling or buying foreclosed properties at a court auction also allows you to avoid this fee entirely.

If buying from a developer though, you may have to wait months or years to be able to actually move in though, as the places are often sold while still under construction.

EXPLAINED: What you need to know about buying property in Germany

Notary fee

No matter where you buy property in Germany, a notary must read out the contract in front of both parties.

This can be tedious and take hours – but the idea is to allow both parties the chance to ask questions on the terms of a neutral party.

Unfortunately, you’ll pay for the privilege and there’s no avoiding it. Notary fees are about 1.5-2 percent of the purchase price around Germany in most cases. Some shopping around might help you find a notary who charges the lower end at 1.5 percent.

If you’re not comfortable with legal German, you’re allowed to bring an accredited translator with you to the reading. This is, of course, at your own cost as well.

READ ALSO: Is it a good time to buy a home in Germany?

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