Buying a Tenanted Property in Germany

German Real Estate Lawyers

Buying a Tenanted Property in Germany

German Real Estate Lawyers

Buying a tenanted property in Germany is often an attractive proposition as they are easier to find in popular locations. Tenanted apartments can often also be purchased for a lower price than a vacant property, and can later be sold for greater profit. However, there are risks involved with purchasing a tenanted property, and a new owner cannot simply move into the property even after purchasing it. Tenants in Germany have significant rights and they can cause difficulties for the purchaser.

At Schlun & Elseven Rechtsanwälte, our team is available to advise purchasers in all matters revolving around purchasing a tenant apartment in Germany. If you require specialised assistance in this matter, please do not hesitate to contact our team directly using our details below.

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Buying an Apartment in Germany

Buying an apartment in Germany can be a lengthy process, and often legal advice is needed. At Schlun & Elseven Rechtsanwälte, our lawyers are available for a range of services involved in the process. Our team is on-hand to:

  • Support you legally through the purchase process,
  • Act on your behalf with the power of attorney,
  • Examine purchase contracts,
  • Advise clients regarding construction defects and what they mean for the property purchase,
  • Evaluate the Teilungserklärung (the “Declaration of Division”),
  • Support you in disputes with the WEG – the Homeowners Association.

If you would like to know more about the process of buying an apartment in Germany and our services, please see our page on the topic.

Buying a Tenanted Apartment in Germany

Buying a tenanted apartment in Germany is often less expensive than purchasing a vacant property. Such apartments are also easier to find on the market and can increase dramatically in value should the tenant move out and the buyer seeks to sell the apartment afterwards. However, buyers need to be aware that purchasing such an apartment means entering into an existing tenancy. Under § 566 BGB, the purchase “does not break rent”, and the new owner cannot simply remove the tenant without reason.

If, after the lessee is given use of the leased residential space, it is disposed of by the lessor to a third party, then the acquirer, in place of the lessor, takes over the rights and duties that arise under the lease agreement during the period of his ownership.

Under this section, it should be noted that the purchaser is bound by all the rights and obligations defined in the previous tenancy agreement. Should they seek to amend and redraft the tenancy agreement, they need to consult with the tenant and gain their consent.

We have outlined the procedure for making the property available for the buyer’s own use below.

Increasing Rent on a Tenanted Property: Legal Advice

Should a person purchase an apartment with a tenant in residence, the rent agreed in the contract applies. However, there are possibilities to raise the rent if as the landlord you carry out modernisation work that significantly increases the value of the apartment, such as improved energy efficiency measures, such as with the heating system and insulation, and improvements to the living value.

The rent can also be increased in cases where the current rent is below the local comparable rate. However, it should be noted that i.e. rent increases are capped by law: For example, the rent may not be increased by more than 20 percent within three years. In some areas in Germany the cap is even lower.

However, although Germany has strong tenant protection, there are grounds for extraordinary termination without notice if a tenant commits a gross breach of contract.

Moving into a Tenanted Apartment: Your Own Use

Purchasing a tenanted apartment for your own use comes with several legal limitations. Generally, buyers need to establish a valid reason for moving into the property and then provide the tenant with written notice of this intention. It should be noted that should a buyer already own an apartment and wants to use the tenanted apartment for their own use; they need to provide a solid reason, as the courts tend to side with the tenant in case of doubt.

Valid reasons for using the property for your own use include the following:

  • A job change, which requires a move
  • An increase in the size of the family, which requires a larger flat
  • Change in living circumstances (e.g. marriage, divorce)
  • Taking in relatives in need of care.

If the aim is to allow a family member to use the property, it must be demonstrated that they are close relatives, such as spouses/partners, children, parents, grandchildren, siblings, nieces or nephews. However, the courts will examine the relationships on a case-by-case basis.

Where the buyer intends to use the apartment for their own need, notice periods exist regarding the tenant having time to move out. The notice periods are provided for by § 573c (1) German Civil Code (BGB), and it bases the statutory notice periods on the length of the tenancy:

  • Duration of tenancy 5 years or less: 3 months’ notice.
  • Period of tenancy between 5 and 8 years: 6 months’ notice
  • Tenancy of over 8 years: 9 months’ notice

Buyers also need to be aware that hardship cases exist, whereby removing the tenant can prove to be impossible. Such hardship cases are provided for under § 574 BGB. They include those involving elderly tenants, those who have a severe illness or require care, pregnant tenants, tenants that are at suicide risk, cases where a move endangers a graduation (school, study, training) and those involving school-age children for whom a change of school may be deemed to be unreasonable.