As a foreign landlord of German property, managing your own property across borders and time zones, on top of the difficulty of the German language, is no small task. You can, of course, seek help from a letting agent, or handle it yourself. This article shares what German landlords should pay attention to when letting a property, and the handover process when a tenant moves in.
Tenant Background and Credit Rating
First, a landlord should be selective about tenants when advertising a property. A good tenant not only brings the landlord rental income, but also saves a great deal of hassle — so choosing a tenant carefully matters. When letting, it is worth asking the tenant in advance to provide certain documents to help the landlord understand their background. Beyond basic personal information, the landlord can ask for proof of income from the past three months and employer details, which together indicate the tenant’s income situation. It is also important to check the tenant’s residence documents, to confirm they are legally entitled to live and work in Germany. Most importantly, check the tenant’s Schufa credit rating, to confirm whether they are creditworthy. Some landlords or tenants in Germany also ask for third-party liability insurance, protecting both sides, depending on each party’s needs. Currently, the tenant type most popular with German landlords is a young, dual-income German couple — first, because their income is more secure, and second, because their personal credit tends to be better.
Landlord Pays the Agent’s Fee
Current German law states that whoever uses an agent’s services pays the agent’s fee — meaning if the landlord engaged the agent to handle letting the property, the landlord should pay the agent’s fee once the property is let, and this cannot be passed on to the tenant. But if the tenant is the one who engaged an agent to find rental housing, the tenant should pay that agent’s fee instead. German agent fees are typically around two months’ cold rent plus 19% VAT. If a landlord’s agent’s fee is passed on to the tenant, this is illegal and should be avoided.
Confirming the Contract Terms
Once a tenant is confirmed, the rental contract must be signed, and the contract should be made in two copies, one kept by each side. If there is more than one tenant moving in — for example, a couple — both the husband and wife should be named on the contract and sign it, confirming that both understand their respective obligations. If there are minor children, they do not need to sign the contract, but the number of children should be stated in the lease.
The rental contract should also specify the rent amount and how any additional housing costs are allocated, such as cold rent vs. warm rent. At the same time, the rent charged must comply with the local “rent index” (Mietspiegel) — rent set 10% or more above the rent index generally breaches the law. However, a German landlord can note a future rent increase in the lease, such as a “staggered rent” (Staffelmiete), but this must also be disclosed before the lease is signed. For more detail on rental contract terms, see “German Rental Contracts: Types, Rent Rules, Deposits, and Termination.”
Move-In Handover: What to Watch For
Before a tenant moves in, the tenant and the landlord (or the landlord’s representative) inspect the property together and both sign a handover checklist confirming the property’s condition.
What the Handover Checklist Should Cover
- Meter readings for water, electricity, and heating
- The number of keys handed to the tenant, all of which must be returned in full when the tenant later moves out
- Confirming the condition of the property’s interior walls, paint, and wallpaper
- Confirming that door locks and window locks open and close normally
- Confirming the condition of the flooring and carpets
- Confirming that water pipes and drains function normally
- Confirming whether there is any mold indoors
- Confirming the number of small fixtures/fittings in the rooms, ideally with photos kept on file
Summary
Germany’s rental property market is active, which has given rise to detailed and clear industry good practice, such as the move-in handover checklist for tenants — ensuring both landlord and tenant are clear on the property’s condition, and doing as much as possible to avoid future disputes.
Have a question about this guide? Leave a comment below, or ask Zagdim directly.
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