German real estate – changes to German property law

60% of German real estate is rented, with only 15% of properties in Berlin owned by the occupier. Demand in the capital is intense: according to the Financial Times, 15,000 homes have been added to the Berlin market since 2010 while the population of the city rose by 150,000 residents. It’s the same story in many German real estate markets in large cities. Short-term rental platforms, such as Airbnb, have raised concerns in Germany of increasing rental prices and gentrification. New legislation has been enacted in an attempt to regularise the rental market, especially in cities such as Berlin, Munich, Hamburg and Frankfurt.

Changes to German property law – what you need to know

The Bestellerprinzip. Until 1st June 2015, German property law allowed landlords to charge tenants agency fees upon moving into a new property, even if the landlord had enlisted the agency’s services themselves. The new law means those who use estate agency services, whether landlord or tenant, are liable to pay the costs. A consequence of this is that many landlords are choosing to find new tenants through free online platforms, such as nestpick. Also, it’s now illegal for landlords to charge tenants retrospectively for finding an apartment.

The Mietpreisbremse. There’s now a rent cap regulation on German real estate prohibiting rent increases of no more than 10% of the local average and provided there has not been a rent increase in the last 15 months. After pressure from the construction industry, new build projects are exempt from this change in German property law, in order to maintain the creation of affordable housing. The government estimates that rent capping will affect about 400,000 tenants a year.

German real estate in focus: subletting in Berlin

Short-time subletting has become a controversial social and political issue throughout large European cities.The rise of Airbnb and its imitators has seen rooms and entire apartments set aside for short-term tourist rentals. In the German real estate market, users in Berlin subletting through Airbnb have risen 15% since 2014. This may have lead to a reduction in available housing and price increases for properties which are available. As a major European tourist destination, Berlin has seen a surge in properties being rented out for short-term stays. The government has raised concerns regarding health and safety, gentrification, housing shortage and undeclared – and unpaid – income tax.

German property law – a case in point

According to the Legal Knowledge portal, in February 2015, the Berlin regional court ruled that an unauthorised short-term subletting of an entire apartment for fourteen days constituted a breach of the tenancy agreement, allowing the landlord to immediately terminate the agreement. Authorisation is required by law but it can be wavered for example if the tenant is subletting to a relative. A word of warning, however when it comes to this example of German property law: most tenants are entitled to prior warning if their tenancy is to be terminated, even as a result of breach of contract. However, this case does appear to set a precedent for extensive, unauthorised subletting in Berlin.

Header image: under creative commons license. Changes made.

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