Guide to Property Leases in Germany

Renting in Germany: Landlord and tenant lease agreements

The landlord and tenant lease agreements for residential property rental in Germany are bound by the German law (BGB - civil law legal code). This law was updated as of 1 September 2001 and since then several additional laws have been passed to clarify some important points. As a result of that, most standard lease contract forms have been updated since then to allow for the changes.

For that reason our advice is to use a landlord and tenant lease agreement which has been issued by one of the institutions which professionally deal with landlords and tenants. One of these is Haus und Grund Hessen, located in Frankfurt. Their lease agreement can be filled in online by the landlord or agent and then signed by both parties, and the recommendation is to make as little changes as possible in that standard form.

it is important that these residential leases are checked carefully by a German legal adviser.

Items to check carefully in the lease

One of the first things to look at it is what costs are included in the "warm rent" (Warmmiete) and which costs are at extra cost (such as electricity, heating, telephone, TV licence etc.) It is interesting to note that "warm" does not mean "heated"! So a "Warmmiete" could potentially exclude heating costs !

Lease contracts are often limited in time even though in Germany it is now normal for tenants to sign unlimited leases with a three months notice period. It is quite possible for a landlord and a tenant to agree on a minimum rental period, such as one or two years, and once signed this is binding. If a tenant does leave in the middle of a binding contract they need to find an alternative tenant to take up the lease or to pay the costs themselves even though they have left.

Such an agreement is also binding on the landlord and for the tenant this confirms that there is no risk of the landlord wanting the house or flat back for their own use.

Dilapidations and repairs at the end of the lease

German residential leases are remarkably similar to commercial property leases in the UK in that the tenant is often responsible for the renovation and decoration at the end of the lease or even at regular periods throughout.

The subject of these repairs and renovations responsibilities being mentioned in the lease went up to the Supreme Court recently and there has been substantial clarification that in summary means either regular maintenance should be done or the property renovated at the end prior to leaving. This is a complicated subject and again good reason to use a good legal contact for drawing up a lease on a property in Germany.

it is interesting to look at an example of one related matter to the nature of lease wording from one letting agent website :

"One point is important, though: There is the german term of "Fachgerechte Renovierung". Two words, that can mean a lot of money. The term "fachgerecht" as defined by Duden Dictionary means: according to the expectations and requirements of a certain subject. It implies a certain degree of professionalism in the execution of the decorations. Any rule obliging you as tenant to hire a company for this is not valid, by the way. The tenant always has the right to do the job himself, but it must be done in such a way as any good professional would do it. So before you try and miss on that, rather get some good offers from the Professionals and have it done correctly to start with. As a rule of thumb, a three bedroom flat may require anything between 1.500 and 4.000 EUR to renovate, depending if the parquet floor needs to be sanded and newly sealed or not and so forth. And: Offers vary a great deal between companies. Don't take the cheapest, but also the most expensive ones are not always better than a good one whose price is reasonable. Ask friends or your agent for help on this if needed."

With residential leases looking as complex as a UK commercial leases it is well worth seeking professional advice on this matter as a landlord.

One tenant taking over from another

it is quite possible that a tenant has carried out renovations or enhancements to a flat and wishes to sell on the extra fittings, new flooring etc to the new tenant. This may or may not be possible but is another thing to watch out for.

Agency fees

The tenant normally pays the residential letting fee rather than the landlord in Germany. This is the opposite again of the UK. Any agency fee is due only when the lease contract is signed. The maximum fee is two months rent plus VAT (currently 16%). This fee would normally apply to a rental contract longer than one year. For shorter terms a fee of one to one-and-a-half months rent may be charged, and in case of furnished apartments with an all-inclusive rent the warm rent can be the basis for such calculation.