Real Estate

This is how the dream of a holiday home comes true

Vacation homes by the sea
Vacation homes by the seaImage by Wolfgang Vogt from Pixabay

A finca on Mallorca, a chalet in Switzerland or a thatched-roof house on the North Sea coast: Germans are becoming increasingly popular with their own holiday home. Statistics from the US group show that never before have so many people searched Google for the keyword “vacation real estate” as in the crisis year 2020. Numerous interested parties followed up the research with deeds. Compared to the previous year, the number of Germans with their own holiday property has risen by around 21 percent, according to a survey by the Institute for Demography (IfD) Allensbach.

The corona crisis has fueled the trend towards second homes. Nevertheless, the German Vacation Home Association (DFV) warns against getting carried away with spontaneous purchases: “Buyers should classify their vacation property as a company with opportunities and risks,” emphasizes Tobias Wann, Chairman of the DFV. In other words: if you want to buy a holiday home, you should take enough time to compare prices, arrange financing and get to know the local conditions.

Keep an eye on the legal situation

When buying property abroad, the rules are often completely different from those in Germany. In many southern European countries, for example, a purchase contract for a property is already binding without a notarial certification. And there are also some restrictions in Germany. For example, in many residential areas it is forbidden to sublet your own holiday home. Potential buyers should ask the responsible authorities what is allowed and what is not.

Basically: Potential buyers should find out about the local legal situation at an early stage. Experts from the financial services provider Dr. Klein recommend hiring a neutral translator if you are not familiar with the local language. For the final purchase process, interested parties should also consult a German-speaking lawyer.

Interested parties should also think about the intended use of the property in advance. Should the holiday home be a place to come to rest after stressful phases? Or is it primarily intended to generate returns? The question of whether you want to rent out your holiday home or live in it yourself influences, among other things, the conditions under which buyers can get a loan, says Henning Ludwig, specialist in building finance at Dr. Small.

Especially if buyers want to use the holiday home purely as a capital investment, many banks require significantly more equity. The reason: poor booking years can significantly depress returns and lead to the buyer having to sell the property – in the worst case, well below market value. “Borrowers shouldn’t have to rely on a rental in order to raise the monthly rate,” advises Ludwig.

Vacation home by the sea significantly more expensive

In the past few years, German citizens have rediscovered their own country as a holiday destination. According to the Federal Statistical Office, tourism in Germany reached a new high of 495 million overnight stays in 2019. Growing demand also affects property prices. The following applies: the more popular the location, the higher the purchase price.

If you want waves in front of the living room window, you usually pay extra. Almost 7,000 euros per square meter are now common for a condominium with a direct sea view on the islands of Norderney or Wangerooge. “It is becoming increasingly difficult for prospective buyers to find their dream property in the right price range,” says Felix Jahn, founder of the real estate service provider McMakler.

If you are looking for a bargain in Germany, you should look around the mainland. “With their close proximity to the Wadden Sea, Wilhelmshaven, Friesland and Wittmund are a sought-after alternative to the prominent but still very expensive islands on the North Sea coast,” says Jahn. The real estate professional also has an insider tip for neighboring countries: Istria in Croatia. Buyers pay an average of 2840 euros per square meter for a holiday home on the peninsula – sea view included.


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