Germany – Property Letting

How does the property letting process work in Germany?

The legal basis for residential property rental in Germany is the Bürgerliches Gesetzbuch (BGB), Germany’s Civil Code. The critical tenancy provisions appear in Book II (Law of Obligations), and the Tenancy Law Reform Act (Mietrechtsreformgesetz) enacted in 2001 covers general lease contract law (§§535–548) alongside housing lease law (§§549–577a). In contrast to some civil law systems where informal arrangements can give rise to binding obligations, German residential tenancy law expects contracts to be set out in writing, and tenants are specifically entitled to receive a written agreement.

The typical end-to-end process for letting a property in Germany runs as follows:

1. Prepare the property and documentation. Verify that the property satisfies habitability requirements, obtain an energy performance certificate (Energieausweis — a legal prerequisite for advertising), and set the rent in line with prevailing market rates or the applicable Mietspiegel (rent index).
2. Advertise. List the property on platforms such as Immobilienscout24, Immonet, or eBay Kleinanzeigen, or engage a letting agent. From 2025 onwards, all listings must present a complete breakdown of rental costs — base rent, service charges, and deposit details.
3. Vet applicants. Landlords typically request a SCHUFA credit report (Germany’s primary credit reference system), evidence of income (usually the three most recent payslips), and recent bank statements. There is no centralised tenancy register in Germany, so the burden of due diligence rests entirely with the landlord.
4. Sign a written tenancy agreement (Mietvertrag). The legal framework for rental agreements is set out in the BGB — particularly §§535–548 — which establishes the rights and obligations of both parties regarding use of the premises, maintenance responsibilities, and rent payment terms.
5. Conduct a move-in inspection. Before the tenancy begins, walk through the property with the incoming tenant to document any pre-existing defects. Prepare a written condition report, take photographs, and have the tenant sign the document to ensure neither party can later be held responsible for damage that was already present.
6. Collect the deposit. The security deposit (Kaution) must be placed in a separate, interest-bearing account — see the deposits section below for full details.
7. Register for tax. All rental income earned in Germany must be declared annually — see the tax section below.

In Germany, rental agreements fall into two main categories: open-ended and fixed-term contracts. An open-ended contract has no predetermined expiry date; tenants may end it by giving proper notice, while landlords can only bring it to a close on specific statutory grounds. A fixed-term contract, by contrast, sets out agreed commencement and end dates, after which neither party is under any obligation to continue or renew the arrangement.

The most common approach in Germany is to enter an open-ended lease, with a legally prescribed notice period of three months calculated to the end of a calendar month, though landlord and tenant may sometimes agree a minimum rental period of one or two years. Unlike many common-law countries where verbal agreements may carry legal weight in residential tenancies, German law places great emphasis on clear, written documentation for all essential clauses — including the rent amount, notice requirements, and any modifications permitted to the property.

What types of rental arrangements are available in Germany — long-term, short-term, and holiday lets?

Germany’s rental market can be broadly divided into three distinct categories, each with its own legal framework and tax treatment. Establishing which category applies to your situation is essential before you begin letting.

Long-term residential letting is the predominant arrangement and is governed by the BGB. These are typically open-ended (unbefristete) tenancies with no fixed expiry, and the full scope of German tenant-protection legislation applies. This is the standard framework addressed throughout this article.

Mid-term furnished letting (generally one to twelve months) occupies a significant middle ground. Temporary furnished renting — where the accommodation is residential rather than tourist-oriented — is lawful under German law. Where landlords use platforms such as Wunderflats to offer furnished apartments for mid-term stays, the rental agreement must comply with German tenancy law while also meeting the particular expectations of short-stay tenants. In high-demand housing markets, furnished and short-term rentals have increasingly been subject to tighter regulation, as furnished letting had become a widely used method of sidestepping rent controls — and steps are now being taken to close these avenues.

Holiday and short-term letting (Ferienwohnungen / Kurzzeitvermietung) via platforms such as Airbnb, Booking.com, or FeWo-direkt is regulated primarily at the city level. There is no national permit, licence, or registration for short-term rental owners in Germany; however, depending on your location, you may need to obtain authorisation from municipal or state authorities, including building permits, operating licences, or change-of-use permits.

Most German cities restrict short-term rentals to between 56 and 90 days per year, with variations depending on the type of property and its location. In Berlin, secondary homes may be rented short-term for up to 90 days annually without additional permits beyond the mandatory registration; primary residences face no explicit day cap, but the entire property still requires a permit. Munich and Hamburg generally limit entire-property short-term lets to 56 days (eight weeks) per year before additional authorisation is required.

In Berlin, short-term rental activity is primarily governed by the Zweckentfremdungsverbotsgesetz (ZwVbG), legislation designed to prevent the unauthorised conversion of residential accommodation to other purposes. The government has also moved to extend the Mietpreisbremse to offer protection for tenants on short-term rental contracts. Always verify the rules currently in force with your local district office (Bezirksamt) before you advertise any property for short-term letting.

What rental income can landlords expect in Germany, and how are rates set?

Rental prices in Germany are shaped by a combination of market conditions and statutory controls. In areas officially classified as “tight housing markets” (angespannter Wohnungsmarkt), landlords must respect the limits set by the Mietpreisbremse (rent brake) when entering into new rental agreements.

Germany’s rent brake has been extended until at least the close of 2029 across all officially designated tight housing market zones. Within these areas, landlords may not charge more than 10% above the local reference rent when entering a new lease, and rent increases for existing tenants are capped at 15% over any three-year period. The designation of “tight housing markets” is the responsibility of individual state governments.

The rent cap is not a nationwide measure. It currently applies across more than 492 designated zones, including major cities such as Berlin, Munich, Hamburg, Frankfurt, and Cologne, as well as smaller university cities including Freiburg and Heidelberg. Landlords should confirm whether their specific address falls within a designated zone by consulting the relevant state government’s Mietpreisverordnung or the Federal Ministry of Justice website (bundesjustizministerium.de).

Rents within these zones are benchmarked against the local Mietspiegel — a rent index published by local authorities or accredited research bodies, showing the typical market rent per square metre for properties of comparable type, age, size, and location. Landlords operating in tight-market zones must be able to demonstrate that their rent does not exceed the relevant local reference figure by more than 10%.

A notable feature of German rental law is the Indexmiete (index-linked rent), which has been legally available in Germany since 1993 and operates differently from rent review mechanisms in most other countries. Under draft legislation currently under discussion, annual increases under index-linked contracts would be capped at a maximum of 3.5% of the previous net cold rent. Such increases are permissible no more than once every twelve months, and written notice is required — any rent increase must be communicated in writing and takes effect only from the beginning of the month following the month after receipt of the notice.

Do landlords need to provide a furnished or unfurnished property in Germany?

There is no legal requirement in Germany to let a property in a furnished condition. The overwhelming majority of long-term residential lets are offered unfurnished — a practice that sets Germany apart from many other rental markets. It is common for German apartments to be let without kitchen appliances, fitted kitchens, or even light fittings; tenants are generally expected to supply and install these themselves. While a landlord may choose to include a fitted kitchen (Einbauküche), this is a matter for negotiation between the parties rather than a statutory obligation.

Where a landlord opts to let a furnished property, additional rules come into play. To recover the cost of providing furniture and fittings, landlords may apply a furnishing surcharge to the rent. Any such surcharge should reflect the current value of the items provided, and the two most widely used methods of calculating it take into account the original purchase price and the age of the furniture.

Under proposed legislation being considered in 2025–2026, landlords offering furnished apartments would be required to itemise their charges transparently — specifying exactly what portion of the monthly rent relates to the base rent and what portion covers the furnished element. The government also intends to introduce a ceiling on furnishing surcharges and a limit on the age of furniture that may legitimately be included in a furnished let. These reforms had not been enacted as law at the time of writing; consult the Federal Ministry of Justice website for up-to-date information on their status.

From a tax standpoint, furniture and fittings supplied by the landlord can generally be depreciated over their useful life as an allowable deduction against rental income. Always seek advice from a qualified German tax adviser on the current depreciation rules that apply to your situation.

Do you need a licence or registration to let a property in Germany?

For conventional long-term residential letting, Germany has no national landlord licensing scheme or central registration requirement. Any adult who owns property is free to let it without first obtaining approval from a government authority — a marked contrast to, for example, the landlord registration schemes that operate in Scotland or parts of Ireland. That said, several important obligations do apply to all landlords.

Every landlord must ensure the property meets basic standards of habitability and safety, and must provide tenants with an energy performance certificate (Energieausweis) at or before the commencement of the tenancy. Landlords are also required to report rental income to the tax authorities (Finanzamt) on an annual basis.

For short-term and holiday letting, the position is considerably more complex. There is no national permit or registration for short-term rental owners in Germany; however, depending on where the property is located, you may need authorisation from city or state-level authorities, which could include building permits, operating licences, and change-of-use permits. North Rhine-Westphalia, for instance, requires hosts to obtain a housing identification number from their municipality and to include this number prominently on all advertisements and online platform listings such as Airbnb.

Every holiday apartment in Berlin must be registered with the competent authority, and the resulting registration number must appear on all listings. Requirements vary considerably from one city and state to another, so it is essential to verify the rules with your local Bezirksamt or Ordnungsamt before advertising any property for short-term letting.

How do you obtain a landlord licence or register as a landlord in Germany?

For long-term residential letting, no licence is required. However, where you are registering for short-term letting in a city that mandates it — such as Berlin — or registering as a landlord for tax purposes, the following broad process applies. Requirements, applicable fees, and processing times differ by city and should always be confirmed with the relevant local authority, as these can and do change.

1. Determine which authority is responsible. For short-term letting, contact your local district office (Bezirksamt) or the relevant Ordnungsamt. For tax registration purposes, your point of contact is the local tax office (Finanzamt).
2. Gather required documents. Registration will typically require proof of ownership, landlord consent where applicable, insurance documentation, and any compliance certificates specified by your city. Key items include a completed registration application, property ownership documents or a copy of the rental agreement, and — in multi-unit buildings — written consent from the homeowners’ association.
3. Apply for any city-level permit. In Berlin, secondary homes used for short-term letting require a paid permit from the responsible district office. Certain cities also require a change-of-use permit (Zweckentfremdungsgenehmigung) if you are converting residential accommodation to holiday letting use.
4. Obtain and display your registration number. In Berlin, the registration number must appear on all Airbnb listings, and this rule is actively enforced.
5. Register with the Finanzamt. All landlords — whether resident or non-resident — must register their rental income with the German tax office responsible for the area in which the property is located. Non-resident landlords register with the Finanzamt covering the property’s location. Returns can be submitted electronically via the official ELSTER portal (elster.de).
6. Set up a guest register if required. German law requires short-term rental hosts to collect and retain records of guests in a GDPR-compliant register for a minimum of three years.

Consult the official website of your local Bezirksamt and the Federal Ministry of Justice (bundesjustizministerium.de) for current requirements, as fees and procedures are subject to regular change.

What are the rules around deposits in Germany?

Germany’s statutory framework for security deposits (Kautionen) is notably more prescriptive than that found in many other countries. Unlike the UK’s Tenancy Deposit Protection scheme — where an independent third-party service holds tenant funds — German law requires landlords to maintain deposits in a particular type of bank account in the tenant’s interest.

The security deposit may not exceed three months’ net cold rent. It must be deposited directly into a savings account earning interest at the rate customary for such accounts, with a three-month notice period for withdrawal. The deposit must be held separately from the landlord’s other funds — mixing deposit money with personal or business accounts is unlawful.

The deposit — equivalent to up to three months’ rent — is collected at the start of the tenancy and serves as security against any damage caused by the tenant or unpaid rent. Once the tenancy ends, the landlord has between three and six months in which to return the deposit. In practice, landlords commonly retain the funds for this period in order to verify that no outstanding utility costs, damage claims, or rental arrears remain before releasing the balance together with any interest that has accrued.

Deductions from the deposit are only permissible for damage that goes beyond normal wear and tear, or for unpaid rent. Disagreements over deposit deductions are among the most frequently litigated landlord-tenant matters in Germany. To protect themselves, landlords are strongly advised to carry out a formal inspection at both the start and end of the tenancy, producing a signed condition report supported by photographic evidence. The relevant provisions are contained in the BGB; seek guidance from a local Mieterverein (tenant association) or property lawyer for up-to-date interpretation.

Who is responsible for maintenance and repairs in Germany?

Under German tenancy law, the landlord bears responsibility for significant repairs to the property. If damage arises, the tenant is required to notify the landlord in writing and allow a reasonable period for the problem to be resolved. A tenant may withhold rent where the landlord fails to address serious defects, but this is only permissible in circumstances where the damage constitutes a genuine threat to health.

The landlord is also responsible for cosmetic repairs (Schönheitsreparaturen), such as repainting walls and radiators or replacing wallpaper. This obligation may be transferred to the tenant, but only where the tenancy agreement expressly states this and the property was in a freshly renovated condition at the outset of the tenancy.

Tenants may be made responsible for minor repairs, but only where this has been explicitly set out in the rental agreement. There is a statutory ceiling on the cost of any individual minor repair — up to €100 per occurrence — and an additional annual aggregate cap applies. These “small repairs” provisions are broadly comparable to similar clauses found in tenancy agreements across other European countries, but the specific amounts and conditions must be clearly articulated in the contract to be enforceable.

Germany raised its CO₂ levy from €45 to €55 per tonne of CO₂ emissions on 1 January 2025, resulting in higher heating costs — particularly for properties reliant on fossil fuels. The additional expense is apportioned between landlords and tenants according to the energy efficiency rating of the building, with more energy-efficient properties incurring a smaller share of the cost. This creates a financial incentive for property owners to invest in insulation improvements and renewable energy installations.

Landlords who neglect required major repairs leave themselves open to rent reduction claims from tenants. Germany has no single centralised body for resolving maintenance disputes; unresolved disagreements are typically handled by the local courts (Amtsgericht) or mediated through tenant or landlord associations.

How are letting agents used in Germany, and what do they charge?

Letting agents (Makler) in Germany provide a range of services familiar from other markets: marketing the property, organising viewings, screening prospective tenants, drafting tenancy agreements, and — in many cases — ongoing property management. For expat or overseas landlords who do not speak German or are not based in the country, a skilled agent or property manager is often an essential partner.

In Germany, the letting agent’s fee for residential rental transactions is borne by whoever engaged the agent — whether that is the landlord seeking to fill a vacant property or the tenant looking for accommodation — under the so-called “Bestellerprinzip.” The fee only becomes payable upon signature of the tenancy agreement. The maximum permissible fee is two months’ rent plus VAT (as of 2025, VAT stands at 19%).

This maximum typically applies to rental contracts running for more than one year. For shorter arrangements, a fee of between one and one-and-a-half months’ rent may be applicable; in the case of furnished apartments with an all-inclusive rent, the gross warm rent may be used as the basis for calculation. The Bestellerprinzip — the principle that “the party who commissions, pays” — means that if you as landlord appoint an agent to source a tenant on your behalf, the cost falls to you. Agents cannot lawfully pass this expense on to the tenant in standard residential lettings.

For ongoing property management (Hausverwaltung), management companies generally charge a monthly fee calculated as a proportion of the monthly rent, typically ranging from 3% to 8%, though this varies by provider and location. Always request written quotations and confirm that any management agreement complies with current German law. Up-to-date information on fee structures can be found through the IVD (Immobilienverband Deutschland), Germany’s principal professional association for property practitioners.

What taxes apply to rental income in Germany?

In Germany, income derived from renting and leasing property constitutes one of seven categories subject to income tax, and is treated in broadly the same way as earnings from employment or self-employment. This applies equally to resident and non-resident landlords, though with meaningful distinctions between the two groups.

For resident landlords, every taxpayer benefits from an annual basic tax-free allowance (Grundfreibetrag) that covers essential living costs and also applies to private landlords. Only income exceeding this allowance is liable to tax. The allowance for 2025 was retrospectively set at €12,096 for single filers and €24,192 for married couples or joint filers. Income above this threshold is taxed at progressive rates beginning at 14%, rising to a maximum of 45%, with a 5.5% solidarity surcharge applicable in certain circumstances.

For non-resident landlords, Limited Tax Liability (beschränkte Steuerpflicht) applies under German tax law, meaning taxation is confined to German-source income — such as rental receipts — rather than extending to worldwide income. Non-residents cannot automatically claim the personal tax-free allowance or certain family-related benefits unless they apply for Unlimited Tax Liability under §1 Abs. 3 EStG, which requires that 90% or more of their total income originates from Germany.

Applicable double taxation agreements (DTAs) — which allocate taxing rights between the landlord’s country of residence and Germany as the source country — typically assign the right to tax income from immovable property to Germany. By virtue of these treaties, it is generally possible to avoid being taxed on the same income in two jurisdictions. Germany maintains DTAs with more than 90 countries; a qualified tax adviser can confirm whether your country of residence has a treaty in force with Germany.

Allowable deductions against rental income (Werbungskosten) include mortgage interest, property management fees, letting agent costs, advertising expenditure, maintenance and repair costs, property insurance premiums, Grundsteuer (property tax), and the fees of a tax adviser. Depreciation (Abschreibung für Abnutzung — AfA) represents a significant non-cash deduction reflecting the building’s gradual deterioration over time. For residential buildings completed from 2023 onwards, an annual deduction of 3% of the building’s acquisition cost is generally available.

Tax returns are submitted via the official ELSTER portal. As a non-resident owner of German property, you are required to file a German tax return by 31 July of the year following that in which the income was earned. Where a tax adviser is engaged, this deadline is extended to February of the second year following the income year. Non-residents are always liable to German tax on rental income from German sources and may face penalties for late or deficient filing. Consult the German Federal Ministry of Finance (bundesfinanzministerium.de) and a locally qualified Steuerberater (tax adviser) for advice tailored to your individual circumstances.

What are the rules around ending a tenancy or evicting a tenant in Germany?

Germany’s tenancy laws are widely regarded as heavily favouring tenants: occupants enjoy security of tenure, the right to privacy, the right to end a rental agreement at any time on three months’ notice, and a range of other protections. Expat landlords accustomed to shorter notice periods or more landlord-orientated eviction procedures elsewhere should take care to understand this aspect of German law thoroughly before entering the market.

German law protects tenants from abrupt termination of their tenancy. A landlord must give a minimum of three months’ notice before a contract can be brought to an end, and this period lengthens with the duration of the tenancy — rising to six months for tenants who have occupied the property for between five and eight years, and to nine months for longer-standing occupants. A tenant, by contrast, may terminate an open-ended lease at any time provided three months’ notice is given to the landlord.

A landlord may not bring a tenancy to an end without a legally recognised justification (berechtigtes Interesse). The valid grounds for landlord termination are narrowly defined in the BGB and include: serious breach of contract by the tenant (for example, persistent failure to pay rent), the landlord’s own requirement to occupy the property or that of close family members (Eigenbedarf), or an intention to demolish or substantially redevelop the building. At present, landlords may lawfully initiate eviction proceedings where a tenant has failed to pay rent for two or more consecutive months, or where rental arrears equivalent to two months’ rent have accumulated over a longer period.

Under proposed legislative reforms currently under discussion in 2025–2026, landlords would be prevented from proceeding with an eviction if the tenant clears outstanding arrears before the case is concluded — a measure that would further extend tenant protections. Landlords are advised to monitor the progress of the Mietrecht II reform closely. Formal eviction (Räumungsklage) requires a court order from the local Amtsgericht and can be a protracted process, frequently lasting many months even after a judgment has been obtained.

What should expat landlords know about managing property remotely in Germany?

Managing a rental property in Germany from outside the country is entirely lawful, but it carries specific practical and compliance demands that are worth addressing carefully before you begin letting.

Power of attorney (Vollmacht). If you are unable to be present in Germany for inspections, contract signings, or other formal matters, you can grant a trusted individual or a property management company a power of attorney (notarielle Vollmacht) authorising them to act in your name. Where property-related decisions of material significance are involved, a notarised power of attorney will generally be required.

Property management. The majority of non-resident landlords appoint a Germany-based property management company (Hausverwaltung) to handle routine responsibilities: collecting rent, coordinating repairs, maintaining communication with tenants, and administering the annual utility cost settlement (Nebenkostenabrechnung). Management fees are generally deductible as a Werbungskosten expense for tax purposes.

Tax compliance for non-residents. As a non-resident landlord, you are subject to Limited Tax Liability (beschränkte Steuerpflicht) under German tax law, meaning your German tax liability is confined to your German-source income — such as rental receipts — rather than your worldwide income. Anyone who earns rental income in Germany is required to file a German tax return, regardless of where they are resident. Engaging a German Steuerberater (tax adviser) is highly recommended; they can submit returns electronically via the ELSTER system and ensure deadlines are met and tax is not overpaid.

Repatriating rental income. No general restrictions apply to the transfer of rental income earned in Germany to an overseas bank account, and Germany operates no exchange controls. It is nonetheless essential to ensure that all German tax obligations have been discharged before or alongside any transfer, in order to avoid penalties. Your bank may ask for documentation confirming the origin of the funds being transferred.

Always take advice from a legal professional before acting, particularly if you are letting property in Germany as a non-resident or in otherwise complex circumstances. Organisations such as the IVD and the German Landlords’ Association (Haus und Grund, hausundgrund.de) can also offer guidance and refer you to suitably qualified local professionals.

Frequently asked questions: letting property in Germany as an expat or foreign owner

Can a non-resident own and let property in Germany?

Yes. Germany places no restrictions on non-residents owning or renting out residential property. Non-residents are liable to personal taxation on income derived from their German property. You will be required to register with the German tax office (Finanzamt) responsible for the area in which your property is situated and to submit annual income tax returns. Appointing a local tax adviser and property manager is strongly recommended.

Is Germany’s rental market more tenant-friendly or landlord-friendly?

Germany’s tenancy legislation is widely considered to be heavily weighted in favour of tenants: occupants have security of tenure, the right to privacy, and the right to terminate a rental agreement at any time on three months’ notice. Landlords, by contrast, may only end a tenancy on specific statutory grounds and must give substantial notice periods. Foreign landlords should factor these constraints into their investment calculations.

What is the Mietpreisbremse and does it apply to my property?

Germany’s rent brake (Mietpreisbremse) has been extended until at least the close of 2029 in officially designated tight housing market areas. Within these zones, landlords may charge no more than 10% above the local reference rent on new leases. The cap is not a nationwide measure and currently applies across more than 492 designated locations, including Berlin, Munich, Hamburg, Frankfurt, and Cologne. Verify whether your property falls within a designated zone via the Federal Ministry of Justice website before setting a rent.

Do I need a local agent or property manager to let my property in Germany?

There is no legal obligation to use a letting agent, but for non-resident or non-German-speaking landlords, engaging a local property manager is strongly advisable. They can manage tenant communications, coordinate maintenance, reconcile the annual utility costs (Nebenkostenabrechnung), and ensure compliance with evolving regulations. Under the Bestellerprinzip, where you as landlord commission an agent to find a tenant, you bear the agent’s fee, which is capped at two months’ rent plus VAT.

How much deposit can I take from a tenant in Germany?

The security deposit may not exceed three months’ net cold rent (Kaltmiete). It must be held in a separate savings account earning the standard interest rate applicable to such accounts. At the conclusion of the tenancy, the landlord has between three and six months in which to return the deposit. Deductions are only permissible for damage beyond normal wear and tear or for unpaid rent — always carry out a formal move-in and move-out inspection supported by photographic records.

Can I let my German property as a holiday rental on Airbnb?

There is no national permit or registration scheme for short-term rental owners in Germany, but city-level rules apply and vary considerably. Most German cities restrict short-term letting to between 56 and 90 days per year. In Berlin, a registration number is required and must appear on all listings. Always confirm the rules currently in force with your local Bezirksamt before advertising a property for short-term letting.

How is rental income taxed for non-resident landlords in Germany (as of 2025)?

Non-resident landlords are subject to Limited Tax Liability (beschränkte Steuerpflicht) and are taxed on German-source rental income only, not on their worldwide income. As of 2025, income is taxed at progressive rates of 14%–45%. Double taxation agreements can prevent the same income from being taxed a second time in your country of residence. A German tax return must be filed by 31 July each year (or by an extended deadline where a tax adviser is engaged). Always consult a qualified Steuerberater for advice specific to your circumstances.

What happens if I want to move back into my own property in Germany?

German law permits a landlord to terminate a tenancy on grounds of personal use (Eigenbedarf) where the landlord genuinely intends to occupy the property themselves or to accommodate a close family member. The termination notice must set out clear and detailed reasons for this claim, and the applicable notice period still applies: a minimum of three months, increasing to six months where the tenant has lived in the property for between five and eight years, and to nine months for longer-standing tenants. Landlords who exploit the Eigenbedarf mechanism falsely — for instance, by declaring personal use and subsequently re-letting the property — face substantial legal consequences and potential liability in damages.