Rental contracts & Housing rights in Germany – 2020 Guide

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Rental contracts & Housing rights in Germany - 2020 Guide

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Last updated: 14 April 2020 / by Sam Williams

A note about COVID-19: This guide is based on the general rules, but there may be some temporary restrictions in place due to the presence of the COVID-19 virus. We are keeping the situation under close review and will update our guidance as necessary.

So, you have got your documentation together and found the flat of your dreams. Even better, you have been offered the tenancy! Before you settle down to a life of German domestic bliss, there is just one step left to navigate: the contract.

No-one enjoys poring over the small print, but it is crucial to make sure you understand what you are signing and to ensure that you have got the protection you are entitled to.

Here is a rundown of your housing rights in Germany for 2020 and what to expect from a rental contract.

Different Types of Rental Contracts

Generally, rental contracts and housing rights in Germany are in favor of the tenant, providing lots of protection. Landlords must comply with strict legislation and are only allowed to evict tenants in very restricted circumstances (see below under Tenant’s Rights).

In addition, short-term contracts for unfurnished apartments in Germany are very rare. You can get these for holiday lets, student accommodation or furnished apartments, but for unfurnished properties, it’s a different matter.

German law does not specify that a rental agreement has to be written; an oral agreement is also legally binding. However, proving that a legal agreement exists and what the specific terms were can be incredibly challenging. You should, therefore, insist on a written rental agreement in all cases.

The tenancy agreement, known as the Mietverträge, can be issued for a specific length of time, but only if certain conditions can be met. Anyone of the following is acceptable as a reason for a fixed-term contract:

  • The property is required for the landlord or their family after the expiry of the fixed-term contract – this is known as Eigenbedarf
  • Substantial changes to the property need to be made that mean it’s unsuitable for contract renewal
  • The premises are going to be leased for professional purposes, such as for use by an apprentice.

Four months before the specified expiry date of the rental contract, the tenant has the right to ask the landlord whether the contract will be renewed. The landlord can refuse to renew the contract, but only if one of the above criteria applies.

This is known as “ordentliche Kündigung– ordinary termination of the contract. They are obliged to provide the tenant with an answer within one month of the inquiry. If the contract cannot legally be terminated, the tenant can request that it’s automatically rolled over into a lease with no expiry date.

It’s worth noting that many fixed-term contracts do not allow for early termination by either party. This means that if you don’t need the property for the full period which you originally signed up for, you’ll still be obliged to pay for the entire term.

Landlords may include an early termination in the contract, which allows you to cancel, typically by giving three months’ notice. However, this is not an automatic right and may not be included.

Some contracts offer an unlimited expiry from the outset. As fixed-term contracts usually roll over automatically into unlimited contracts, many landlords don’t see the benefit of providing fixed-term contracts in Germany. A rental lease that has no specified end date is known as “unbefristeter mietvertrag“.

An indefinite expiry lease can still be canceled due to the same conditions of ordentliche Kündigung, which apply to fixed-term tenancies. The landlord must provide the tenant with proper advance notice. The acceptable notice period in Germany is usually considered to be three months.

The contract can also be canceled under extraordinary termination of the contract: außerordentliche Kündigung. Only a very narrow set of criteria are considered to be extraordinary. Improper conduct by the tenant which infringes on the landlord’s rights, or failure to pay the rent for two months or more would both be considered as extraordinary circumstances.

Tenants have the right to cancel an unlimited contract whenever they want, but they must supply the landlord with three months’ notice.

Extraordinary circumstances can apply here too, such as dangerous living conditions or property, which is unavailable. Under exceptional circumstances, the tenant is not obliged to provide three months’ notice, but the written notification must make it very clear what is considered to be the exceptional circumstances.

One complication is that the agreement can only be canceled by everyone named in the contract. Therefore if there is more than one tenant named, everyone in the agreement would have to agree to the cancellation. To make life easier for all involved, it’s common for landlords to have separate tenancy agreements with each individual who will be living at the property.

What does utilities included mean?

Aside from the different lengths of contracts in Germany, there are also two types of rent: these are known as cold rent and warm rent.

Cold rent usually applies to unfurnished properties and means that only the basic rent is included in the cost. The tenant will need to organize their own energy supplies and other utility services. Outlets for water, gas and electricity must be supplied and available upon moving in.

Warm rent is most often used for furnished apartments, or a sublease contract. In addition to the basic rent, the monthly cost also includes fees for a range of utilities and services. These should be specified in the contract, so the tenant knows exactly what they’re paying for. Not all costs will be included in each arrangement, so you may still have additional expenditure on top of the warm rent.

Common Clauses in Rental Leases

The rental contract can be a lengthy document, but it’s there for your protection. Having a comprehensive lease protects the tenant from the outset. You should generally expect to see the following in your rental agreement:

  • Full name and address of the landlord
  • Address of the rental property and a description
  • Start date of the lease (plus an end date if applicable)
  • Monthly rent
  • Method of payment and due date
  • Deposit
  • Utilities and/or extra costs
  • House rules specific to the property ie/pets, smoking and decorating
  • Landlord obligations (such as repairs)
  • Notice period
  • For furnished properties, an inventory
  • Future rent increases

There are rules around how much your landlord can increase your rent, but the precise details depend on where you live. In some states, the rent cannot be increased in the first year, while in others, the increases in three years must not exceed 20%.

Some landlords set out terms for stepped rent, known as Staffelmiete, in the rental contract. This schedule specifies how the rent will increase over a period. If your landlord opts for Staffelmiete, no additional increases are permitted.

Rent increases are not permitted more than once per year and they must be set out in the contract. If there are no clauses in the rental agreement about increases, the landlord can only increase the rent under specific circumstances:

  • The rent is lower than the current market average for the type of property. This condition can only apply if rent increases are not specifically excluded within the contract and there have been no increases in the previous 15 months.

    The increase must be justified by either a sworn statement provided by an expert, sample prices from three similar properties, official data known as Mietdatenbank or a rent index.

    This type of rent increase constitutes an extraordinary event under the terms of the contract and would allow the tenant to terminate the contract.

  • The property is upgraded and the utility value of the property is increased, the living conditions are improved, or there are energy or water savings. The maximum increase permitted is 11% and triggers an extraordinary right for the tenant to terminate the contract.

Services and Utilities

When you start your rental lease, there are several different types of utilities and services you will need to arrange. This involves finding a new supplier or transferring a contract into your name. Here is a rundown of the main ones you might need:

Cable/Satellite/TV/Internet Connection/Telephone (Kabel/Satellite Fernseh/Internet Anschluss/Telefon)

The costs for all of these services are not typically part of the rental contract and are picked up by the tenant directly. It’s advisable before moving in to check what type of services are available if this is a priority for you.

The sole exception is cable/satellite TV in an apartment. There may already be a dish or service set-up for the rest of the building that you can have access for, in return for a fee. This may be offered as part of the Nebenkosten.

Whether you live in an apartment or a rented house, if you want to install a new satellite dish, you will generally have to get permission from your landlord, in line with the terms of your rental contract.

 

Electricity (Strom)

Apartment blocks often have a meter (Zähler) for each unit, so you’ll need to set up your own contract when you move in.

In most cases, you’ll be using the same supplier as other tenants, but depending on the terms of the contract, it may be possible to use a different supplier. There is generally more flexibility about switching electricity suppliers if you are renting a house.

Meters are typically read once a year, with payments made either monthly or every other month via standing order. At the end of the year, adjustments are made to your payments, depending on the meter reading.

 

Heating (Heizung)

No-one wants to live in a cold home, so this is an essential part of your utilities that you won’t want to miss out!

For apartments, it’s not uncommon for heating costs to be included in the Nebenkosten and for the landlord to make calculations about each tenant’s portion of the cost. This may be done via individual metering or just an estimate based on space and the number of heaters available.

In other apartments, the tenant pays the full heating costs themselves via the contract with the heating company.

In houses, the heating may be provided via either electricity, gas (liquid or natural) or oil. Electrical heating is the least common of them all. Liquid gas and heating oil have to be pumped from the supplier into tanks on the property while natural gas is piped in.

It’s less common for heating costs on a house to be covered under the Nebenkosten on the rental contract. When fuel needs to be delivered, tenants can arrange a regular contract, known as a Dauerauftrag.

In homes where there is no central heating and coal or other types of fuel are required for stoves, the full cost is borne by the tenant.

 

Rubbish and Recycling (Abfallentsorgung)

The rubbish and recycling collection is the responsibility of the municipality, and for apartments, the cost is typically included in Nebenkosten.

For houses, the rubbish and recycling may be included in Nebenkosten, but it may also be up to the tenant to organize payment for by contacting the local authority. The amount depends on the size of the bin and is typically made via standing order twice-yearly.

 

Water (Wasser)

This is almost always part of the Nebenkosten package in apartments and can either be costed via an individual meter or calculated based on the size of the property.

It’s common for the cost of water to be negotiated as part of the rental contract.

Houses typically have their own meter and the costs can be paid to the landlord via Nebenkosten, but it’s common for tenants to pay the local authority directly. The expenses are paid every two months, usually by standing order, and then adjusted annually.

 

Wastewater (Wasserentsorgung)

Sewage and wastewater are handled by the municipality and usually one of the primary costs included in Nebenkosten for houses and apartments alike.

If it’s not included for any reason, the tenant can set up an account with the local authority who will calculate the cost. Payment is usually made quarterly and adjusted annually.

Tenant’s Rights

In addition to their rights regarding the length, expiry and termination of leases, tenants in Germany also have some other rights. These are broadly:

  • The landlord must provide and maintain the rental property in an acceptable state of repair

  • If any faults or defects occur during the rental, the landlord must ensure repairs are completed. The tenant has an obligation to let the landlord know as soon as the fault arises
  • If defects are not repaired, the tenant can make deductions from the total rental sum without requiring permission from a court to do so. They can also claim expenses for any costs incurred. The amount deducted must be commensurate with the loss of functionality and typically only for a small sum. To be able to do this:

    1) The tenant must have informed the landlord, ideally by registered post

    2) The item was being used for its intended purpose when it broke

    3) The landlord was given time to fix the repair

    4) The tenant was not aware of the defect before signing the lease

  • In addition to the reduction in rent, the tenant can withhold the rent, or part of it, if repairs are not made. Unlike the reduction, the withheld rent must be repaid to the landlord when the repairs are complete
  • If the property is sold, the tenant has the right to remain in situ. They have the right to purchase the property before it is sold to anyone else, with the sole exception of the landlord’s family members. A new owner will take the place of the existing landlord in the rental lease and cannot terminate the contract nor change the amount of the rent outside the terms already agreed

Security Deposit

It is a commonplace for the landlord to ask for a security deposit when a tenant moves in.

This is held for the duration of the lease and is designed to cover the costs of any damage which is caused or non-payment of the rent. This deposit is known as Kaution.

There is a limit on the amount of Kaution, which can be requested. Under German law, the security deposit can be no more than a sum equal to three months of rent (minus utility expenses where applicable). In addition, the tenant must be permitted to pay this deposit in three monthly installments.

There are also strict conditions which apply to the Kaution; the landlord cannot simply pay it into their own bank account.

The money should be held in a separate account, which has been specifically set up for this reason, known as a Kautionskonto. Any interest which this sum attracts must also be repaid to the tenant when the lease is terminated and the deposit refunded.

Holding this type of bank account ensures that the tenant’s money is protected against any financial difficulties experienced by the landlord.

If they were to become bankrupt, the Kautionskonto is ring-fenced. It is also possible to set up a joint deposit account. This provides the tenant with even greater security over their funds.

Joint accounts are known as Und-Konto. Both parties are required to agree to any transactions on an Und-Konto, so the tenant and the landlord must agree repayments and costs deducted.

Decorating and Maintenance

The landlord has the responsibility for maintaining the property and keeping it in a good state of repair, but the tenant is expected to cover anything classed as a “minor repair”.

This would include anything subject to regular use by the tenant, such as door handles or locks, or repairs costing up to around €100. A tenant should not be expected to pay for repairs that come to more than 7-8% of the annual rent in any year.

Tenants are usually considered responsible for wear and tear, but it should be set out in terms of the rental contract.

Absolute terms that require the tenant to carry out certain renovations are not permitted. For example, a clause which states the rooms must be painted every three years regardless of the condition would be considered unlawful.

A landlord can only expect a tenant to rectify wear and tear caused during their own tenancy.

If a property was showing signs of wear before they moved in, a tenant is not obliged to return it to an “as new” condition when they leave.

German law specifies that these types of wear and tear repairs are limited to piping on the heating system, internal doors, window maintenance, carpets and painting of the walls, floors and ceiling.

If the tenant damages any of the property or its contents during their tenancy, it is their responsibility to pay for the damage.

Having private liability insurance and home contents insurance can help you to the cost of accidental mishaps. It’s not usually a stipulation of the rental contract, but most Germans view this type of insurance as an essential.

Sign on the Dotted Line

We hope that this guide walked you through everything you need to know about rental contracts and your rights as a tenant.

It may be an inconvenience but making sure you check the contract carefully will make sure you are not hit with anything unexpected later down the line.

Rental contracts & Housing rights in Germany - 2020 Guide

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