What are the conditions for renting a home in Berlin and are short-term rentals prohibited?

Overview of the housing market in Berlin

The real estate market in Berlin, according to the Emerging Trends in Real Estate report, is considered one of the most stable and secure within the whole of Europe. However, it is characterized by tight rental regulation, as the level of demand for housing far exceeds its available supply. The city authorities introduce measures aimed at managing rental prices. In addition, about 85% of Berlin's population lives in rented apartments.

Analysis of lease aspects

In cooperation with German lawyers, we investigated the main nuances to be considered when buying a property for subsequent rental, as well as clarified the process of legal tenant occupancy and methods of increasing rents.

Short-term rental

As far as short-term rentals are concerned, the possibilities for renting out accommodation in this format are rather limited in Berlin. In 2013, the capital adopted a law that prohibits the use of residential premises for purposes other than the primary purpose, including short-term rentals and the use of apartments as offices. Violations of this legislation can result in fines of up to 500,000 euros.

At the same time, property owners can request permission from local authorities, which allows them to change the status of the apartment and start earning rental income.

Conditions for authorization

The process of obtaining a short-term rental permit becomes particularly difficult in areas with a high density of hotels. To obtain a permit, at least one of the following conditions must be met:

• Public Interest:If the public interest takes precedence over the private interest, e.g. when housing is rented to relatives of patients undergoing treatment in Berlin.
• Critical financial situation:If a landlord is facing a critical financial situation and a short-term lease is the only way to solve their financial problems.

However, with the high price of long-term rentals, it is difficult to meet these requirements. Another requirement for authorization is the need to build additional long-term rental housing to compensate for the shortage of housing in the area. At the same time, the rents must be within the average for the area.

Application procedure

Applying for a permit requires payment of a fee, which is 225 euros per apartment. Potential owners may also face additional costs on the way to obtaining a permit, including the need to have the property appraised. It can take between 2 and 6 weeks to review the submitted documents. The permit can be issued either indefinitely or for a specific period.

Landlord's responsibilities

After successfully obtaining a permit, the landlord is obliged to pay the city authorities a compensation of 6 euros per square meter of rented space. Many landlords may find the readiness for short-term rentals unprofitable due to the additional costs and obligations.

If the permit is successfully obtained, the owner is assigned a unique registration number that is fixed to the particular apartment and cannot be transferred to another owner. This number must be included in advertisements for short-term rentals, which adds another layer of control by government agencies.

Conclusion

Thus, the real estate market in Berlin represents both an investment opportunity and a space that requires strict adherence to legislation.

Overview of apartment offers in Berlin

There are currently 193 apartments for sale in Berlin, among which you can find many interesting options. In particular, new apartments in a modern residential complex in the Friedrichshain district are available starting from411 000 €.Construction is expected to be completed in the second quarter2024.

Another new residential development is located in Weissensee, where prices start from€330,000and commissioning is scheduled for the fourth quarter.2022.Apartments with private garden and parking space are available in Schöneberg with prices from316 000 €with a projected completion date of the third quarter2024.

Investment proposals

For those considering investing or renting out their home, an interesting proposition would be a package of60 apartmentsin Friedrichshain with prices from990 000 €and completion of construction in the second quarter2025.Additionally, in Wilmersdorf it is possible to buy12 apartmentsbuilt in2023,at a price starting from675 000 €.

Steglitz-Zelendorf offers71 apartmentswith prices starting from856 000 €There is also an interesting offer in a restored historic building in Wilmersdorf with a price from749,000 €scheduled for delivery in the first quarter2024.It is also worth paying attention to a new modern residential project in the Rudov neighborhood, where available20 exclusive apartments,ready for sale in the fourth quarter2024.

Apartments for rent in Berlin

As for apartment rentals, since February.2020through April2021In Berlin, a law that limited maximum rents was in force for a number of years. This law mainly applied to furnished housing and short-term rentals, but it did not apply to new buildings erected after theJanuary 1, 2014,as well as on commercial real estate, dormitories and apartments that receive government subsidies.

April 152021Germany's Federal Constitutional Court overturned the rent control law, declaring it “completely invalid”. After that, rents began to rise as property owners sought to recoup their financial losses incurred during the period of the law. At the same time, rent restrictions remained in place for municipal buildings.

Factors affecting rent

Previously, under the law, maximum rent levels were determined based on:

• years of construction
• building energy efficiency
• built-in kitchen
• finish quality
• other factors

If there were only one or two apartments in a single building, the cap rent increased by10%.

Conditions for rent increase

In case the building is equipped with an elevator and the apartment is equipped with a modern built-in kitchen, quality plumbing systems and floors that meet high standards, it is possible to consider increasing the maximum rental rate by one euro per square meter, provided that the energy consumption does not exceed 120 kW⋅h per square meter per year.

However, for such an adjustment to be possible, the property must meet at least three of the five established criteria. In situations where housing maintenance costs exceed rental income,Investment Bank Berlin (Investitionsbank Berlin, IBB)has the right to determine a new rent ceiling. Tenants can then apply for subsidies to reduce the financial burden of the rental cost.

Suspension of rental rate increases

The law, which went into effect on June 18, 2019, suspended rent increases for existing tenants.

Tenant eviction process

In cases where the property has been in possession for less than five years, owners should be aware that evicting tenants can take up to three months. If the property has been owned for between five and eight years, the process can take up to six months, and if the tenure exceeds eight years, it can take a full year.

It is worth emphasizing that if the tenant does not have access to the apartment in an apartment building, the eviction may be faster. Therefore, if the new owner intends to replace the tenant or move in himself, it is important for him to consult with lawyers on all the legal details of the contract in advance, even at the purchase stage.

How to organize the division of the house into separate apartments?

How can the division of a building into separate apartments be organized? This procedure is very common, especially in the context of the sale of buildings. In Germany, the process is fully legal, although there are discussions about possible restrictions on the division of older properties in the future.

Dividing a property into apartments involves four main stages:

• Separation Project Development:First of all, a subdivision design must be developed, which is created by a qualified architect.
• Obtaining a certificate from the building inspectorate:The building authority must then be contacted to obtain a document certifying the complete insulation of the dwelling, known as abschlussbescheinigung. This stage usually takes around four to five weeks. The price for obtaining this certificate depends on the size of the property and ranges from €50 to €100 per apartment.
• Certification of the application by a notary public:The third step is to draw up a declaration of partition, which must be certified by a notary. The notary can only certify your signature, which costs approximately 70 euros, but errors in wording may invalidate the document. The verification of the contents of the application for compliance with current regulations depends on the market value of the property.
• Registration in the Land Registry:At the final stage, all collected documents are sent to the land registry (grundbuchamt), which changes the status of each property to apartments. The cost of this procedure is determined based on the assessed value of the real estate.

Taxation on real estate sales

With regard to taxes on the sale of real estate, the key point is that if the property is sold within ten years of its purchase, the seller will be liable to pay speculative capital gains tax (kapitalertragsteuer). This tax is a form of income tax and is levied on the profit realized from the sale of real estate.

To avoid undesirable situations, it is important to familiarize yourself with tax legislation and get legal advice in advance to understand your rights and obligations. Thus, knowing all the subtleties and following the recommendations will allow the sale or change of tenant procedure to be carried out successfully.

Conclusion

In conclusion, Berlin's real estate market is a unique and complex ecosystem where every step, from buying an apartment to renting it out, requires careful consideration. Yes, I have noticed that the interest in renting in this city continues to grow, and with it the complexities faced by tenants and landlords.

Since 2013, Berlin has introduced strict rules restricting short-term rentals, and getting permission for them has become a real challenge. Many people may think that such restrictions are a barrier to the use of their assets, but it should be remembered thatstable marketandhigh demandcreate opportunities forlong-term investments.

Legal aspects

Understanding the legal aspects, such as obtaining permits and complying with conditions for short-term rentals, becomes an important factor that can lead to success or, conversely, failure. It is necessary to thoroughly research the local market, analyzing offers and prices to find the best solution that will bring a stable income.

Key points for a successful tenancy

• Study of legislation- it is important to know all the nuances and requirements for obtaining permits.
• Market analysis- It pays to monitor housing prices and offers carefully.
• Long-term perspective- the right approach can lead to a steady income.

Despite the challenges, I believe that the right approach and a detailed understanding of local legislation can not only avoid fines, but also make real estate in Berlin a profitable investment. Ultimately, successful renting is a journey that requires patience and effort, but also offers great opportunities for those who are willing to face challenges and take advantage of the market.