Despite the COVID-19-induced economic crisis and thanks to the government's and central bank's relief measures, the German real estate market has bounced back stronger, meaning that prices are on the rise, demand is high, and purchases are booming. At the same time, a lot of attention is paid to properties' sustainability. For example, many German states require the installation of photovoltaic and solar panels on new buildings — legislation that is expected to apply on a federal level soon. When we talk about real estate investment, Berlin, Frankfurt, Stuttgart, and Hamburg are some of the cities that attract the most attention among buyers.
Renting a home in Germany
According to data from Empirica Regio, a trend that has been noticed lately suggests that the average German home size has increased by 20 percent since 1990, meaning that Germans prefer to live in more spacious homes. For example, the average space per person in Stuttgart is 37 square meters, whereas, in Cologne and Berlin, it is 38.9 square meters. German apartments are usually rented unfurnished, without kitchen appliances (it's even common for renters to buy their own oven, fridge, etc., and take them with them when they leave – which can be confusing for those not used to this). In most cases, the rent, payable on a monthly basis, does not include gas or electricity bills. However, it may include water, heating, and maintenance fees. Thus, Warmmiete includes costs such as water, property tax, gas, electricity, and waste disposal services, whereas Kaltmiete doesn't. The price difference between Warmmiete and Kaltmiete is called Nebenkosten. It is important to research the average Nebenkosten in your city so as not to allow the owner of the house to overcharge you.
Here are several things to keep in mind when moving to your new home in Germany:
- new tenants are used to bringing their own kitchen appliances or buying them from the previous tenant. It may sound like an exaggeration, but Germans tend to take their light fittings when leaving a place;
- depending on the local council arrangements, you will often have to register and pay individually for rubbish disposal and obtain your own garbage bin. This encourages people to recycle as much as possible at the free collection points;
- when renting a flat, check who is responsible for cleaning the staircase, front walk, or shoveling the snow in winter. It could be you! Many buildings respect weekly rotas;
- there are laws to prevent noisy neighbors from disturbing the rest of the community;
- you may need to ask the owner's permission to have a pet or install a satellite dish or television antenna;
- cars, bicycles, and baby carriages may only be parked in designated areas. You can also wash and dry your laundry in dedicated areas.
Finding accommodation in Germany
Finding accommodation in Germany can be a challenge because the demand is always higher than the offer. Regarding rent prices, you should keep in mind that rent is the single biggest expense you will have, and therefore, you should be prepared to spend some time researching your options. As far as the rental market is concerned, Munich is by far the most expensive city in Germany concerning renting and the overall cost of living. Just after that comes Frankfurt and Stuttgart, followed by Dusseldorf and Hamburg. By contrast, rent prices in Berlin and eastern Germany are much more affordable (although rising quickly).
To find accommodation in Germany, you can start by doing online searches and talking to expats in Germany, many of whom are in Expat.com's Germany Forum. If you want an expert's help, you can consult with a real estate agent, which, of course, will lead to some extra costs. Students usually opt for shared flats (Wohngemeinschaft or WG), whereas young professionals find a balance between living independently at a lower cost in studio flats.
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Signing the rental agreement in Germany
To rent a house in Germany, you will have to pay a security deposit, which is stated in the contract, and by law, it shouldn't exceed the value of three months' rent. Overall, everything you discuss with the owner of the house must also be clearly stated in the rental agreement, which you should check carefully before signing. Also, before signing, it is advisable to visit the place a couple of times and at least one time during daylight. An exhaustive inventory must be done, especially if the house is furnished. Make sure to take pictures of any defects you notice to prevent deductions from your deposit.
The owner may also require proof of your financial statements and proof of employment and even ask for a recommendation letter from the owner of your previous home. In general, there are no fixed-term leases in Germany, although a minimum period of occupation of one or two years may be required. Termination notice is for two to three months. In case your rental agreement requires you to have a minimum period of occupation, but if you have to leave Germany before, you will be legally bound to your lease until the minimum occupation period ends. In other words, you will have to pay rent and maintenance fees until the termination of the required minimum period term. However, you may be able to negotiate with the owner to help find a new tenant to replace you, and this is often possible because demand for renting is so high.
Important:
Remember to submit the Anmeldeformular to the house owner in order to file your residency certificate application. The Anmeldung is a very important document for opening bank accounts, signing job contracts and other necessary things in Germany.
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The German Tenants' Association (DMB) - Deutscher Mieterbund
Buying property in Germany
If you are looking to invest in property in Germany, you can either obtain full ownership of the land or property or lease the land for anything between 30 to 99 years with the build on the land. Before making the purchase, technical advisors should inspect the site and obtain necessary information from authorities to make sure all permits, environmental conditions, and architectural requirements are met. As an expat investor, you are welcome to invest in real estate in Germany. Nevertheless, due to the convenience of the European single market, the process is easier for European citizens and owners and entities that are registered in the German Transparency Register (Transparenzregister) or its equivalent in another EU member state. Once you become the owner of a property, note that you cannot proceed with any kind of refurbishment and construction you desire unless it is approved and in alignment with the Federal Building Code and the Federal Land Use Ordinance.
Good to know:
As in many countries around the world, Germany's economy shrank slightly in 2023 due to high-interest rates and the rising price of energy. However, Germany's GDP is expected to grow by 1.2% in the next five years, making it a stable investment for property buyers.
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Renting for commercial use
In Germany, you can rent a property to use (Miete) or benefit from it (Pacht), for example, in the case of leasing a hotel with all its equipment and operating it. When you lease, the owner should be responsible for maintaining the premises in the agreed condition and for major repairs. However, the tenant must undertake small repairs and changes related to decoration. Usually, rent is paid monthly, and the property must be used for the purpose that has been agreed upon in advance by both parties in the lease. Besides the owner of the property, public building law and the zoning plan can also determine what uses are permitted and what are prohibited.
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