Essential Information for Landlords: A Comprehensive Guide
Renting out a property can be a lucrative investment, but it comes with its own set of tasks and obligations, as outlined in German rental law.
Firstly, it's crucial to declare rental income for tax purposes and state it in Annex V of the tax return. Profits within the relevant tax year must be taken into account. However, up to a tax-free allowance of currently €8,820 for singles and €17,649 for married couples, the rental income is tax-exempt.
When it comes to property maintenance, landlords are responsible for the upkeep of their property, including repairing roof damage, windows, or pipes. The tenancy law also sets other tasks for landlords, such as ensuring a functional heating system, preventing unreasonable noise, maintaining gardens and green areas, and a duty of care.
To set the right rent, landlords should familiarise themselves with local comparable rents and whether they are in an area with rent control. Two- to three-room apartments up to 75 square meters tend to offer the best yields and rental prospects.
Before a tenancy agreement is concluded, landlords should obtain various documents and information from their potential tenant. This includes current income and employment certificates, a personal document, a tenant's self-disclosure, a Schufa report, and a certificate of debt freedom.
The tenant also has certain rights and obligations. The tenant should ensure that the existing rental agreement is clearly documented and legally binding. In case the property is sold, the buyer automatically assumes all tenant rights and obligations (§ 566 BGB). The tenant also has a right of first refusal (§ 577 BGB) if the rental property is converted into condominium ownership and sold. This legal right allows the tenant to purchase the property under the same conditions to avoid unfavorable rent terms or insufficient maintenance agreed by the new owner.
The tenant should also verify that any agreements on rent increases or maintenance responsibilities are properly recorded to have legal grounds for contesting unreasonable rent or inadequate upkeep. It's essential for both landlords and tenants to understand these responsibilities to ensure a smooth and fair rental experience.
