Existing property

Existing property - An existing property is a building that has already been completed and is either occupied or ready for occupancy - as opposed to a new construction or a developer’s project that is still under construction. The purchase of an existing property is typically made “as is” with a contractual disclaimer of warranty. Existing properties make up the majority of the German real estate market and offer advantages such as immediate availability, established infrastructure, and a well-established neighborhood.

Advantages and Risks

Advantages of an existing property:

• Immediate availability - no waiting for construction to be completed, no construction cost risk
• Location in established neighborhoods with existing infrastructure (schools, shopping, public transportation)
• Visible condition - construction quality can be assessed before purchase and evaluated by experts
• Often a lower price per square meter than a comparable new construction - especially in outlying areas
• Floor plans and ceiling heights in historic buildings are often more spacious than in modern new constructions

Risks of an existing property:

• Hidden defects - moisture, hazardous substances, deteriorating pipes that only become apparent after purchase
• Need for renovation - heating, insulation, windows, and electrical systems may be outdated and in need of replacement
• Exclusion of warranty - the buyer bears the risk for hidden defects, unless the seller fraudulently concealed them
• Limited energy efficiency - higher ongoing energy costs and, if applicable, renovation obligations under the Energy Efficiency Act (GEG)

Valuation and Purchase Inspection

When valuing an existing property, the following factors are decisive in addition to location and size: year of construction and building condition, upgrades performed (heating, windows, roof, plumbing), the available energy performance certificate (energy consumption or demand certificate), the condition of the roof, facade, and basement, and, for condominiums, the financial situation of the condominium association (maintenance reserve fund, trend in maintenance fees, renovation measures already decided upon and those foreseeable in the future according to the financial plan and minutes).

GEG Renovation Obligations After Purchase

Anyone who purchases an existing property also assumes existing renovation obligations under the Building Energy Act (GEG). Within two years of the transfer of ownership, owners are required to:

• Insulate the top floor ceiling if it is accessible and not yet sufficiently insulated (requirement: U-value ≤ 0.24 W/m²K)
• Insulate heating and hot water pipes in unheated rooms
• Replace old boilers (older than 30 years, except for low-temperature and condensing boilers)

In addition, all heating systems must be gradually converted to renewable energy by 2045-the exact deadlines depend on the age of the existing system. Buyers should take these obligations into account as early as during purchase price negotiations.

Existing Properties as an Investment

Existing properties offer special advantages for investors: immediate rental income starting from the day of transfer of ownership, tax depreciation (AfA) on the building portion, and the ability to deduct renovation costs as business expenses-provided they are not capitalized as acquisition-related construction costs. Depending on the year of construction, the AfA amounts to 2% (from 1925), 2.5% (1924 or earlier), or 3% (new construction from 2023) of the building’s value annually. For properties in prime locations that are in dire need of renovation, the total return after renovation can exceed the current gross returns of newer properties.

Practical Tip for Property Owners in Nuremberg and Franconia

We recommend that buyers in the Nuremberg metropolitan area have an independent expert provide purchase guidance before acquiring an existing property. Particularly in Nuremberg’s post-war buildings from the 1950s to the 1970s in Langwasser, Schreibersdorf, or Reichelsdorf, hazardous materials (asbestos in facade panels and vinyl flooring), outdated aluminum electrical wiring, and inadequate basement perimeter insulation are frequently encountered. The cost of 400-800 euros for expert purchase advice is negligible compared to the risk of undiscovered renovation costs of 50,000 euros or more. In attractive Nuremberg Wilhelminian-style neighborhoods such as Gostenhof, St. Johannis, or the Wöhrder Viertel, well-maintained existing properties are long-term investments that retain their value despite a higher purchase price, provided the energy efficiency is up to standard.

Frequently Asked Questions

Is there a warranty when purchasing an existing property?

As a rule, the warranty is completely excluded in the notarized purchase agreement-the sale takes place “as inspected and as described in the land register.” However, this exclusion expressly does not apply to defects that the seller fraudulently concealed. If the seller fails to disclose a defect known to them-such as recurring mold infestation, known water damage, or an unauthorized change of use-they remain liable for damages despite the exclusion clause. In the event of a dispute, the buyer must prove fraudulent concealment-careful documentation of the inspections (written inquiries, email correspondence) is therefore recommended.

What renovation obligations do I have after the purchase?

The GEG stipulates certain retrofitting obligations in the event of a change of ownership: The top floor ceiling must be insulated if it is accessible and not yet sufficiently thermally insulated. Heating and hot water pipes in unheated rooms (basement, attic) must be insulated. Certain old boilers must be replaced. These obligations must be fulfilled within two years of the transfer of ownership. In addition, the GEG’s phased requirements for the transition to renewable energy apply. We recommend addressing the renovation obligations transparently in the purchase agreement and factoring the costs into your financing plan.

Is an existing property more financially worthwhile than a new build?

This depends largely on the individual renovation needs and the quality of the location. A well-maintained existing property in an established location can be more affordable than a new build after factoring in all renovation costs-often, the total costs are 10-20% lower than those of a comparable new construction. For properties in dire need of renovation, the total costs of the purchase price and renovation can reach or even exceed the price of a new build. The key advantage of an existing property lies in its immediate availability and-in prime downtown Nuremberg locations-in the quality of the location, which is significantly superior to new construction projects on the outskirts.

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