Practitioner's News

Munich, September 3rd, 2011

Although FF FinanzRecht does not advise on legal matters concerning English or Scottish law, residents of the United Kingdom may benefit from an inside view on legal issues concerning financing in Germany.

There is, for example, a distinctive difference in dealing with funding and mortgages.

Whereas the English resident first asks about a financing secured by a mortgage with a broker or directly with its bank, the German counterpart usually seeks an investment first and secures accordingly a funding of the object. As result, there are no equivalent issues such as a tax investigation as part of a fraud prevention scheme of the U.K. Mortgage Verification Scheme, which allows in certain circumstances a lender to pass on applicants’ details to HM Revenue & Customs for checking.

The German counterpart will rather experience a daunting scrutiny by its funding bank which usually determines the availability of financing after having conducted a financial due diligence on the object in question.

There are also distinctive differences in tax matters, estate agents’ fees and legal costs. For example, whereas an U.K. estate agent usually charges the seller, in Germany the estate agent is also eligible to charge the buyer a set percentage of the price. In the end it may be worthwhile to consult with an experienced solicitor on legal issues concerning financing in Germany.