The German real estate market is a gold mine in the eyes many foreign investors. The significant benefits of buying a home in Germany make this step an investment that may be particularly profitable, an investment that is returned in a relatively short time, that may double and triple the original sum over the medium and long term. Many investors are concerned about the laws in Germany that tend to favor the tenant. However, there are many advantages to the German legal system, the foremost of which is the stability of the rental market that guarantees secure returns over time.
As potential property owners, it is important to be well informed about the legal procedures in Germany, which are different from the procedures in Israel. Germany is a highly organized country when it comes to real estate and taxation transactions, with a “no surprises” policy. We at Nadlan Germany offer service that is based on experience in dealing with the German authorities, which may not be easy or simple for an investor who is unfamiliar with this market. It is important to us that you also have all the relevant information regarding your investment in Germany. The system of laws in Germany is organized and orderly. In the next section, we will look at the types of contracts and rental agreements in use in Germany, and the conditions for raising the rent in order to increase the profits from your investment over the years.
Conditions for raising the rent
- Based on a contract clause that stipulates a fixed, gradual increase in rent each year
- Linked to the legal price index
Insurance and deposit laws
Types of contracts in Germany
- Unlimited contract – a standard contract that can be renewed periodically and is the most widely accepted contract.
- Limited contract– a contract that is limited to a certain period, but only with a satisfactory reason indicated by the property-owner for this limit. For example, the property-owner wishes to use the property personally at the end of the contract, either for him/herself or his or her family, or plans to renovate the property at the end of the contract. There is no legal restriction regarding how long the limited period can be, but in theory, in this type of rental, the contract cannot be renewed (a condition that protects the tenant). Any limited contract longer than one year must be made in writing.
- ‘Regular’ vacating of the property can only occur in the case of an unlimited contract.
- ‘Immediate’ vacating must be due to a specific breach of a contract clause by the tenant, such as non-payment of rent. In such cases, the contract is terminated immediately.
- Tenant commits a gross breach of contract
- The property-owner needs to make use of the property for him/her or their family
- The contract prevents the property-owner from making economically justified use of his/her property
The Importance of Rental Laws in Germany
Germany is one of the most orderly countries in the world that has a well-regulated real estate market, including foreign investment and local rentals, and it demands uncompromising and full compliance with all the conditions stipulated by law. The best and safest way to deal with Germany’s laws and rigid bureaucracy is to work with experts in the field, who have the training, knowledge and experience required to draft contracts properly. Our years of expertise in the real estate investment market in Germany make us a leader in the field. We have accumulated extensive experience over years of making great deals for our investors. This experience allows us to make responsible, considered decisions that yield high returns.
Would you like to hear more about the real estate acquisition processes in Germany?The Nadlan Germany team will be happy to assist you. Just click here and leave us your contact details, and a member of our team will get back to you with more information about buying real estate in Germany.