A fixed-term tenancy arrangement is for a specific period of time, such as a year. A fixed-term tenancy has no maximum duration. The length of the lease must be specified in the tenancy agreement.
You have finally found the perfect apartment, but it has a catch: the lease is limited to three years. We explain to you what you have to pay attention to with such a temporary lease.
- Are fixed-term rental contracts permitted in Germany?
- What reasons can your landlord use to justify a fixed-term rental contract?
- How long can your landlord limit the rental agreement?
- What to do if the time limit is ineffective?
- What are the disadvantages of a fixed-term lease?
- What are the advantages of a fixed-term rental agreement?
Are fixed-term rental contracts permitted in Germany?
The special thing about a fixed-term lease is that the lease ends at the end of the agreed period without anyone having to give notice – it simply expires. In principle, your landlord can also offer you a fixed-term rental contract, but only under special conditions (Section 575 (1) BGB).
Since 2001, only the so-called qualified temporary lease has been permitted. This means that landlords can only limit the term if they have a reason to. Only reasons that are in the law are recognized. Landlords often write the reason directly in the lease or add an addendum to the contract.
If your landlord has not recorded a legally recognized reason or nothing in writing, your tenancy is deemed to have been concluded for an indefinite period (Section 575 (1) sentence 2 BGB). For you, this means: You don’t have to move out even after the deadline has expired.
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What reasons can your landlord use to justify a fixed-term rental contract?
Your landlord can limit the rental agreement for three reasons:
- He wants to use the apartment himself later.
- He plans to demolish or renovate it after your rental period.
- He would like to rent it out later as a company apartment.
If your landlord intends to use the rooms as an apartment for himself, his family members or members of his household after some time, then he may limit the rental contract (Section 575 (1) No. 1 BGB). It is sufficient if he only wants to use the apartment as a second or weekend home.
Your landlord must, however, specifically write down who is likely to use the apartment and when. If he only gives “personal needs” as the reason, then that is too general. It could correctly read like this: “The rental contract is limited to September 31, 2021 because my son will then start his studies in Munich and move into the apartment.”
For private landlords, it is much easier to limit a lease than to terminate a tenant for personal use. If he wants to quit, he has to prove that he needs the apartment. The time limit is all about what he plans. Housing associations or other legal entities such as a GmbH cannot set a time limit because of their own use.
Reconstruction, modernization or demolition
If your landlord is planning a renovation or demolition of the building, he may limit the rental agreement until construction begins. However, the condition is that the construction work would make the continuation of the lease considerably more difficult (Section 575 (1) No. 2 BGB). It is sufficient that your landlord intends to renovate, his plans do not have to be concrete yet. Time limits due to construction work are particularly common.
Use as a company apartment
This limitation reason is rather rare – it does not happen that often that someone moves into a company apartment (Section 575 (1) No. 3 BGB). However, it is not entirely unusual if the landlord needs an apartment for a caretaker, for example.
Exchange of reasons – your landlord may not exchange the stated reason for the fixed term. So he cannot first write that he has made a limited term for his son because of his own needs, but now he also wants to extensively renovate the apartment.
Special rooms – landlords can conclude temporary leases for special rooms without any restrictions – without any particular reason. This concerns, for example, living spaces that they rent out only for temporary use, such as holiday apartments. Landlords can also limit contracts for rooms in student or youth residences without needing a reason (Section 549 (3) BGB).
Time limit for subletting – sublease contracts are very often limited in time. However, this is only possible if the main tenant has given a special reason. If the main tenant moves abroad, he can sublet his apartment for a limited period until his return. Your landlord can also give you a temporary rental agreement if the main rental agreement is also limited in time. You can find more information in the subletting guide.
How long can your landlord limit the rental agreement?
There is no time limit for fixed-term rental contracts in the law. For example, your landlord can offer you a ten-year contract.
If you want to stay in the apartment beyond the time limit, you should ask your landlord four months before the end of the tenancy whether the contract will actually expire. Inquire whether your landlord really needs the apartment for himself or his relatives or whether he will implement his redevelopment plans (Section 575 (2) BGB). Your landlord will then have to respond within a month.
If he answers later, you can stay longer accordingly. If your landlord informs you that he will only implement his plans later, you can request that the rental contract be extended accordingly (Section 575 (3) BGB).
Waiver of the right to terminate
If the contract excludes termination for a certain period of time, it is not a fixed-term contract. Rather, it is a contract with a minimum rental period. For such an agreement to be effective, it must apply to tenants and landlords alike.
If the waiver of termination in a rental contract for living space is to apply for more than four years, it is usually ineffective due to unreasonable disadvantage for the tenant (Federal Court of Justice, judgment of April 6, 2005, Az. VIII ZR 27/04). This also applies if both sides waive the option of termination.
What to do if the time limit is ineffective?
If your lease does not contain a specific and legally recognized reason for the fixed term, your lease is deemed to have been concluded for an indefinite period. You are then legally in the position of a regular tenant. So your landlord can only terminate you if he has a reason for termination.
But that doesn’t mean that you can get out of the contract at any time. The ineffective time limit is replaced by a mutual waiver of termination. For you, this means: Although your contract is unlimited, you can cancel it at the earliest at the end of the agreed rental period (BGH, judgment of December 11, 2013, Az. VIII ZR 235/12).
What are the disadvantages of a fixed-term lease?
Fixed-term leases have three major disadvantages for tenants. You should know them.
- You cannot cancel
As a tenant with an open-ended tenancy, you can always give three months’ notice. This is different with a fixed-term rental contract: ordinary termination is not possible. So you commit to the apartment and your landlord for a longer period of time.
Your life situation can change, however, so that you need a different apartment: a bigger one, one in a different location or one that is suitable for your age. If your landlord does not agree to the termination of the contract, you can only try to find a subtenant. You cannot cancel.
- You have no protection against dismissal
Every tenant is well protected by the law, because a landlord always needs a reason to give notice. In the case of temporary rental, however, your contract simply expires without your landlord having to prove a legitimate interest.
With a fixed-term rental contract, only extraordinary termination is possible. For example, your landlord can terminate the contract without notice if you do not transfer your rent for months. And you can cancel if the apartment poses health risks.
You may get out of your temporary lease earlier if your personal situation is very difficult. If you suddenly get sick and therefore have to move to another apartment, then you can refer to a hardship case.
There is no social clause
If a landlord terminates the contract, the tenant can object to the termination for social reasons, for example because the move-out date falls during an important examination phase in the course. When the time limit expires, a tenant cannot invoke the social clause and object to the termination of the tenancy due to social hardship (Section 574 BGB).
What are the advantages of a fixed-term rental agreement?
A fixed-term lease can also have advantages:
- No rent increase possible
The landlord can only increase the rent up to the local comparative rent if this is stated in the contract. This could, for example, read as follows: “The landlord is entitled to make legally permissible rent increases for the duration of the fixed-term lease.” If there is no such regulation, your landlord can only demand the rent provided for in the contract. However, this is an advantage with rather cheap and long-term rental contracts.
No termination possible for personal use
Anyone who has a fixed-term rental contract does not have to expect a termination for their own use during this period. You should carefully weigh up the advantages and disadvantages before signing, because a fixed-term rental agreement usually restricts you greatly and thus also has an impact on your life planning.