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Investing in micro-apartments in Germany

The market for micro-apartments in Germany is booming mainly due to the country’s large student population, which makes up for the popularity of this particular property type. In 2016, the volume of student property transactions reached €750 million, almost five times higher than in 2015.

Micro-apartments are furnished one-bedroom apartments of 17–35 m² with a bathroom and a kitchenette photographee.eu / Depositphotos

Typically, investors buy micro-apartments to lease them to students, business travellers, seasonal employees, young professionals or tourists. These tenants want private, comfortable and affordable accommodation. In other cases, buyers purchase such properties for their own use.


Micro-apartments are cheaper compared to other types of residential property due to their smaller size. In large German cities (Berlin, Munich and Nuremberg), fully finished and furnished micro-apartments cost between €120,000 and €300,000 and parking lots sell for €15,000 to €30,000.

Investors can buy micro-apartments using loans. Foreign nationals can take out up to 50% LTV loans at 2% per annum in Germany. The mortgage arrangement fee is about 1% of the loan amount.

Buyers should factor in transaction costs of 10–15% of the property value, which include a purchase tax (3.5–6.5%), notary fee (1–1.5%), real estate agent's fee (3.6–7.1%) and property registration fee (0.8–1.2%).

Taking into account all the expenses and mortgage costs, the minimum amount an investor needs to buy an apartment is €70,000. If the buyer already has a bank account in Europe, he or she does not need to visit Germany to complete the purchase.

The buyer pays in instalments when purchasing an off-plan micro-apartment. If the payment is delayed, the developer has the right to terminate the purchase agreement.

Sample payment schedule

Construction stage Share of total purchase price, % Payment deadline

Foundation laying


December  2016

Substantial completion


May 2017

Roofing, drain-waste-vent and window installation


August  2017

Heating pipes, bathroom equipment and electrical installation, room plastering


November 2017

Floor screening, bathroom tiling


May 2018

The completion of facade finishing and the remaining works


July 2018

Final completion


November  2018

In most cases, investors who buy off-plan micro-apartments get bank guarantees for a full refund if the developer fails to complete construction. In certain cases, such measures apply if the developer holds back the property commission. The agreement specifies the delay allowance.

New-built apartments in Germany come with a five-year warranty. If the owner finds building defects in the apartment, the developer must repair them for free. The developer also provides a warranty of up to two years for interior works and furniture, depending on the terms of the sale agreement.

Rental income

The average yield rate for micro-apartments in Germany is 3.5–4.5% per annum. This is higher than the yield for conventional long-term rental flats (2–3% p.a.). The rent for a 20m² micro-apartment reaches €500–600/month in Berlin and €750–900/month in Munich.

In the case of short-term and mid-term rentals, rates are adjusted in accordance to the market growth, and the owner can terminate the rental agreement and evict tenants that default on payment. These rules do not apply to long-term rentals – most rental agreements protect tenants from eviction and rent increases for many years to come.

The owner of micro-apartments can lease them independently or participate in a pooled investment project in which each investor owns a share of the building. In this case, a management company leases the apartment and distributes the revenue between the owners proportionally to the investment amount. Each owner is guaranteed a share whether the apartments rent out or not.

If the owner who participates in a pooled investment project decides to live in the micro-apartment, he or she will stop receiving a share of the building’s rental revenues bilanol.i.ua / Depositphotos

Maintenance and management costs

The owner of a micro-apartment signs an agreement with a management company, which takes full charge of leasing the property.

Owners spend about €1,200–2,400 per annum on maintenance, which includes property and rental income taxes and management fees.

Annual micro-apartment maintenance costs in Germany

Property tax


Building maintenance (repairs of communal areas, lift maintenance)


Management company fee

10–15% of the rental income or a fixed rate of up to €50 per apartment

Rental income tax

14.77–47.475% for individuals, 15.825% for legal entities

If the micro-apartments are leased for less than 6 months, the owner pays a 7% VAT on rental income. VAT does not apply to mid-term rentals (6–12 months).

Cutting the tax base can significantly reduce the tax on rental income. In this case, the owner has to report the costs of travelling to Germany (air tickets and hotel fees), furniture and property depreciation expenses in the accounting documents.

Micro-apartments are among the most popular types of rental residential property. For as little as €600 per month, renters can live in private accommodation, a price that is hard to find in big cities. As such, this type of property a relatively liquid asset and enables you to receive a passive income.

Ekaterina Raznikova Ekaterina Raznikova Tranio project manager for Germany

Buyers of micro-apartments for investment should consider cities with:

  • At least 30,000 residents
  • Well-developed transport infrastructure
  • A growing population
  • Unemployment rate not exceeding Germany’s average
  • Major companies and universities

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    Daria Batiuk
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