While these yield figures are not dissimilar to those on offer for investors in the UK property market, the tax-offsetting schemes available in Germany combined with the lack of capital gains tax after 10 years and relatively low mortgage rates might give investors serious food for thought.
How to get started investing in German property
If you’re keen to start a continental property portfolio, one way to get going is consult an investment firm that specialises in foreign real estate.
This can save you time researching potential areas and properties to invest in, and the firms can also help you navigate a foreign banking system if you’re hoping to apply for a mortgage.
They can also help with the homebuying experience. However, this all comes at a price.
Local firms that specialise in helping British investors buy property in the German market charge up to 6pc of the sale price of a property as commission, according to Mr Gordon.
While IP Global doesn’t charge commission, instead making its money by buying property in bulk and reselling it at market value to investors, this limits you to the properties it has in its portfolio.
If you’re willing to try and go it alone, you could save significantly on the upfront costs or commission associated with roping in the help of an investment firm.
In this case, approaching property brokers in Germany is a good place to start.
Ask as many questions as you can about the properties on offer, and the areas that they’re in. In some instances, they may be able to help you ascertain the profitability of a potential investment.
Several websites let you search their databases for thousands of properties within Germany, including atHome, Rightmove and Zoopla.
Rental agencies in Germany can manage the letting of properties you own on your behalf.
IP Global’s sister company, Prime Residential, partners with a local agency to do this for its clients. It charges a management fee of 10pc of your rental income plus VAT for its services.
You can pay for a German property using a UK bank account by making international money transfers.
However, you’ll be at the mercy of your bank’s exchange rate – given the potential size of the transactions, it’s important to shop around and consider various providers that can help you transfer cash abroad.
Are property prices expected to rise soon?
There is no way of knowing with any certainty what the future holds for the German market, and as with any investment, the value of property you buy can go down as well as up.
Nonetheless, Mr Protten is cautiously optimistic that things will be looking up soon – and prospective investors would do well to get in now.
“I’d say that today is a somewhat good time to look at the German real estate market,” he said.
“The demand is naturally there. Returns in the German market have in the past been very steady, and it’s often used by investors as a hedge [against inflation]. There’s a chance that property prices could rise quite quickly.”
