Real estate investments in Berlin

Popular investor questions

1. How to evict a tenant from a tenant apartment that you purchased?

   The owner may evict the tenant if the apartment is required for the owner as a place of residence. Another legitimate reason for eviction may arise when the housing is required as a place of residence for the owner’s relatives, such as the owner’s natural and adopted children, nieces and nephews, spouse, parents of both spouses, siblings.

   The owner who purchases an apartment in a former commercial apartment building may request eviction of a tenant who used to live in such apartment before legal division of the building into separate apartments upon expiry of at least three years after the purchase.

   The tenant that receives an eviction notice may continue to reside in the apartment for some time. The eviction notice period is three months for tenancy shorter than five years, six months for tenancy lasting for five to eight years, and 12 months for tenancy longer than eight years.

   Socially vulnerable tenants, such as seniors, disabled, pregnant women, tenants with small children, are entitled to deferrals and thus subject to longer eviction notice terms.

2. How to rent out a residential apartment for a short term?

   Renting out a residential apartment for a short term is extremely challenging. The owner has to obtain a permit from the city authorities; however, the city authorities often issue permit refusals, especially if the apartment is located in a district with lots of hotels.

   Grounds for short-term rent:

   1. The landlord is acting in the public interest. For example, he rents to relatives of patients in Berlin clinics from other cities.
   2. The landlord is in financial distress, and short-term rent income is the only way to creep out of the dire state.
   3. The landlord is building another housing for long-term rent.

   If short-term rent is approved, a compensation fee of 6 € per sq.m is to be paid to the city authorities. The permit approving the rent may be for an unlimited or a limited term, as the authorities may think fit. Violation of the conditions is punishable with a penalty of up to 500,000 €.

3. How the new law freezing rent prices in Berlin works?

   The new law caps and freezes rent increases for five years. The law applies to the rent rate and not the utilities. The rent rate may be increased in a renovated housing by no more than 1 € per sq.m even if the renovation costs are higher.

   The new rent law came into effect on 23 February 2020. New developments built after 1 January 2014, commercial rents, communal housing, and state-subsidised apartments are not subject to the law. However, the law regulates furnished apartments and short-term rental apartments.

4. What increase in rent is allowed?

   According to the German Civil Code, rent may be increased by no more than 20% during the three years. Rent increase is capped at 15% during three years in Berlin, Munich, and Hamburg. Rent may be increased no more than once in a period of 12 months.

1. Is a buyer of property in Germany eligible for a residence permit?

   Purchase of property in Germany does not confer any grounds to obtain a residence permit.

2. What additional costs arise in a purchase of property?

   The buyer will have to cover the transaction costs that amount to 10–15% of the property price. Such costs include the real estate purchase tax at 3.5–6.5%, notary’s fee of 1–1.5%, legal fee of 1–1.5%, agent’s fee of 3–6% + VAT and a regional registration fee of 0.8–1.2%.

3. Is it safe to buy an under-construction apartment?

   The investor in Germany is protected by law. If the developer fails to complete construction, the payments made shall be returned in full. The buyer makes payment by installments.

4. Can a property be bought without visiting Germany?

   Only two procedures require personal presence — bank account opening and legal entity registration (if applicable). A notary may be granted a power of attorney to represent the buyer at all the other purchase stages.