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German Housing made easy for Expats

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For Expats in Germany, housing is a very important topic. Having somewhere comfortable and safe makes the whole experience memorable.

Germany offers Expats a lot of options when it comes to housing. Expats can either:

• Rent furnished apartments to homes
• Buy apartments or home

Below is an in-depth look at the options for Expats in Germany.

Renting in Germany

housing

Tenancy law – information on tenancy agreements, notice periods & Co.

In tenancy law there are numerous regulations that tenants and landlords should be aware of: For example, who pays the broker’s commission, when a tenant has to do cosmetic repairs or how tenants should proceed in the event of a rent reduction. This guide to tenancy law clarifies these and other questions about notice periods, deposits or rent increases.

Types of rental agreements

There are different types of rental agreements:

  • In the case of an open-ended rental agreement, the tenant can always terminate the contract with three months’ notice without giving any reason   (Section 573c BGB). The landlord, however, can only terminate the contract if he has a legitimate interest, for example his own use .
  • In the case of an open-ended rental contract with a mutual waiver of termination, both tenants and landlords waive their right to terminate for a certain period of time. However, a maximum of four years may pass from the signing of the rental agreement to the termination of the rental relationship – if the period is longer in the contract, the corresponding rental agreement clause is ineffective.
  • With index leases, rent increases are based on the price index for the standard of living of all private households in Germany.
  • In the case of the graduated lease, the contract specifies when and how much the rent will increase in the future.
  • In the case of a sublease, the main tenant is the landlord of the subtenant.

What Expats should know before the tenancy

In metropolitan areas in particular, it is not exactly easy for tenants to find a new rental apartment. In one point, however, they have had an advantage for some time: in most cases they do not have to pay a broker’s commission, which since the introduction of the ordering principle has been borne by the person who hired the broker, and that is almost always the landlord. If the tenant is asked to pay a commission even though he was not the agent’s client, the following applies: He can get it back later.

Tenants who are looking for an apartment and have found an interesting property should not sign the contract too quickly, but should also pay attention to contract details. Renovation clauses, for example, which are often ineffective, are a frequent point of contention. Further pitfalls: In the contract, a mutual exclusion of termination is agreed for both parties, which is possible for a period of up to four years. In this case, the tenant is bound for a long time and cannot terminate the contract with the usual three-month notice period.

Tenants should also be careful with the amount of rent: If the rent brake applies in a location, the rent demanded may be a maximum of ten percent above the value of the local comparative rent. However, if the brake does not exist in a place, the landlord may also demand a higher rent as long as he does not reach the limits of the rental growth. By the way: In some cases, be season – or index leases closed. This can have both advantages and disadvantages for the tenant in terms of future rent.

What Expats should know during the tenancy

It often happens that things break in the apartment; a defective water pipe, a non-working heater, a hole in the roof. Basically, it is the landlord’s responsibility to repair such damage. However, they must be reported by the tenant with a notification of defects. Only then can a rent reduction be enforced.

If a tenant violates his obligations, he can be warned or, in the worst case, even terminated without notice. In particular, if the tenant does not fulfill his main obligation, the punctual payment of the rent, the landlord can give notice of termination relatively quickly.

Further liabilities to the tenant can result from the rental agreement. Many tenants are obliged to carry out cosmetic repairs by rental contract clause. And with a minor repair clause, the tenant can also be obliged to bear the costs for mini repairs himself – but only within narrow limits because it is the landlord’s job to remove any damage.

In addition to numerous obligations, a tenant also has extensive rights. The most important thing: During the rental period, the landlord has to keep the apartment in a contractual condition. If there are significant deficiencies that limit the usability of the apartment – for example a defective heating system – the tenant has the right to reduce the rent. However, the tenant is not entitled to reduce the rent in all cases.

If the landlord wants to increase the rent, the tenant does not have to accept this in every case, because not every rent increase is permissible, but usually those up to the local comparative rent. In addition, deadlines must be observed.

In some cases, the tenant’s situation changes during the tenancy, for example because he no longer has enough money for the rent as a result of unemployment. In such cases it can make sense to sublet part of the apartment with permission from the landlord. However, he cannot simply reject the request. If the tenant has a legitimate interest in subletting, the landlord must consent to this according to the law.

New job, new relationship: Sometimes the tenant wants or has to end the tenancy as quickly as possible. However, he always has to observe the notice periods. For tenants this is normally three months. In addition, there are still temporary rental contracts that cannot be terminated at short notice. However, temporary leases are only effective if the landlord provides a qualified reason for the fixed term, e.g. later personal use.

What Expats should know about the end and termination of the tenancy

It is important for the tenant to know that at the end of the tenancy he is not allowed to ‘dwell’ on the deposit, for example by stopping the last rental payment in order to settle it with the deposit. Because it should serve the landlord as security for any claims, for example if the tenant has caused damage that only becomes apparent upon handover. However, the landlord is obliged to return the deposit to the tenant promptly after the end of the tenancy if the landlord makes no claims. A fixed point in time is not regulated by law, but courts usually assume a period of three to a maximum of six months.

Usually, a handover report is made on the day of moving out. Defects are noted here, for example. Tenants should pay careful attention to what is written in the log and also have the previous log to hand – not that they are later held responsible for defects that they did not cause. In addition to the logging of defects, the levels of electricity and, if necessary, water and gas meters are noted. These should be reported to the local suppliers immediately after moving out.

However, the tenant’s rights do not end with the end of the old tenancy: The landlord is obliged to reimburse a final statement of additional costs. It should be noted that he has at least twelve months for this. The following applies: The billing must be no later than twelve months after the end of the billing period – not the moving-out date! – be with the tenant. Otherwise the tenant no longer has to pay any additional claims. 

Important tenancy law topics in Germany

Rent amount & rent increaseThe federal states in Germany can determine areas in which the rental price limit applies. 

In these areas, landlords are only allowed to demand rents for new leases that are a maximum of ten percent above the local comparable rent. 

This is usually determined using the local rent index.
Regardless of the rental price brake, rents that are 50 percent above the local comparable rent are considered usury. 

This is inadmissible and is considered a criminal offense. 
The landlord then faces fines or even imprisonment. 
He may have to pay back rent that is demanded too much.

The cap limit applies to rent increases in ongoing tenancies: within three years, the landlord may increase the rent by a maximum of 20 percent, in some tense regions only by 15 percent.
Rental agreement – from house rules to cosmetic repair clausesIn most cases, so-called form rental agreements are used for rentals, which are drawn up by the landlord. 

In principle, however, it is also possible for tenants and landlords to negotiate individual clauses or even the entire contract individually.

The BGB protects tenants in § 307 from unfair contractual provisions: “Provisions in general terms and conditions are ineffective if they disadvantage the contractual partner of the user inappropriately contrary to the requirements of good faith. Inappropriate discrimination can also result from the fact that the provision is not clear and understandable ”.
Keeping animals in rented apartments: what is allowed and what is forbiddenNot all pets are the same – especially not in tenancy law. Small animals may be kept by tenants without the landlord’s permission. With dogs, cats and exotic animals, things get more complicated. Tenants should know this about keeping animals in the rented apartment.
Rent reductionRent reduction in Germany is possible but is normally dependant on lack of deficiencies in the apartment. Typical deficiencies that justify a reduction in rent are: mold in the apartment, a broken heating system, constant construction site noise, legionella in drinking water, permanent construction sites or permanent stench in the stairwell. The percentage is however not easy to determine.
Additional costs & operating costsThe landlord has the right to transfer operating costs to his tenants by means of a rental agreement. 
This is exactly what is common in Germany and is provided for in standard form rental agreements.
Lease termination Tenants can get out of a rental agreement and the associated apartment very quickly and easily in almost all cases. 
Landlords, on the other hand, don’t have it that easy. 
You can only give notice to your tenants under certain conditions.
Rent brakeThe federal government of Germany can curb the rise in rents in areas with a tight housing market. When the rent brake is applied, the rents for new leases may not be more than ten percent above the local comparative rent.
Rent capThe rent cap freezes the net rent including all surcharges, such as for furniture, over a certain period of time
Rental depositThe landlord of an apartment can usually demand a maximum of three months’ rent as a rental deposit from his tenant. 
However, the landlord may only ask for a deposit if this has been agreed in the rental agreement.
SublettingThe landlord’s permission is a basic requirement for subletting in most cases

Buying a home in Germany

housing

Buying a house or apartment in Germany is easy.
A lot of Expats in Germany are opting to buy instead of renting.

Below are important factors you should consider when purchasing a home in Germany.

1. The inspection – apartment and surroundings

Have you found an apartment that interests you? The first step is a conscientious inspection of the apartment . An apartment may sound like a dream in the description in the exposé or on the real estate portal, but in reality it may not correspond to your ideas at all. Conscientiousness is also advisable for existing apartments due to the usually applicable phrase “bought as seen”, which makes overlooked defects your only problem after signing the contract ( a seller can only be held responsible for the hidden defect ).

When viewing the property, consider the current market situation in your purchasing region! If there are many apartments for sale on the market in your region, you can be more selective. When the real estate supply is scarce, features such as floor coverings or bathrooms become secondary. However, always pay attention to the old and most important “real estate wisdom “: You can change everything about a property except the location .

You should consider the following aspects when choosing your dream property:

FeatureMany Apartments on the marketA few apartments on the market
Location & infrastructureConsider fullyThe most important factor, cut back if necessary and, depending on the budget, look for less central locations, reduce infrastructural features to the most important ones (kindergarten?, School?, Shopping?)
Property priceCompletely consider, negotiate, compare with other objects and determine market valueTake into account, adjust to high prices and possibly also accept a slightly higher price if buying is worthwhile compared to renting
Does the apartment meet my expectations in terms of room layout, size and distribution?Consider fullySee what changes to the floor plan are possible, what compromises can be made?
Is the apartment bright enough for me?Consider fullySee whether something can be changed in the situation by installing additional light sources and ask whether these changes would be permitted (owner association, building authority)
Do I like the existing floor coverings (laminate, parquet, tiles, etc.)?If this is only a small investment factor, consider whether money should / can be used for renovationConsider and calculate whether there is enough money for the renovation
Does the bathroom equipment meet my requirements (walk-in shower, bathtub, etc.)?If this would only be a small investment factor or if the apartment otherwise meets the expectations, consider whether money should / can be used for a renovationIf this would only be a small investment factor or if the apartment otherwise meets the expectations, consider whether money should / can be used for a renovation
Does the apartment need renovation or modernization?Consider and budget for renovation / refurbishmentConsider and budget for renovation / refurbishment
Energy efficiency of the apartment / energy certificateTake full account of the actual energy consumption in the consumption certificate or on ancillary cost billsInquire whether the apartment can be energetically optimized, what the community of owners is planning and whether the budget is sufficient

2. Purchase of an apartment as a capital investment or for reference

Depending on whether you are looking for a condominium for yourself or an apartment as an investment  , you should consider a few additional aspects .

a. Buying a home as an investment or pension plan

If you want to earn rent as income from your new apartment or if you want to sell the apartment at a profit at a given point in time , the location, region, infrastructure and energy efficiency are crucial data. You must of course like the property for sale, but consider whether buying an apartment in another region with a better return is an option and exclude your personal factors from the property search.

b. Buying an apartment for your own home

Before you decide to buy instead of rent, you should be sure that the apartment and its surroundings suit you and your requirements. And not only in the next two years, but ideally at least for the next 10. The ancillary purchase costs such as brokerage , notary and land registry costs as well as real estate transfer tax should have paid off over the period of use.

3. Financing your apartment – this is how it works

The housing financing must be carefully calculated, because in most cases it is a substantial loan amount . We explain the four most important steps on the way to the optimal home loan .

1. Cash drop

So that you know which price segment is suitable for you, you must firstly know the monthly income available for the loan installments. Our household calculator is a good help here. On the other hand, you should list how much equity you have available. This does not count towards the balance in your current account or savings book, but also other investments such as a building society loan agreement .

2. Determine the budget

As soon as you know the equity and the monthly scope for the real estate loan, you can use our budget calculator to determine how expensive the apartment can be. Please note that this budget must also cover the additional purchase costs.

3. Obtain and compare offers

Do you have an apartment in your sights that fits your budget? Then get at least one financing offer, preferably several.

4. Collect and submit documents

You have received a good offer and would now like to receive a financing commitment from the bank? Then you have to submit numerous documents by now at the latest. Unlike home finance, home finance requires you to submit far more documents. This results from the fact that issues relating to the homeowner association (WEG) also influence the value of the apartment, which the bank must assess.

For example, special usage rights and the amount of the maintenance reserve influence the real estate valuation.

4. Checklist for buying a home – the 10 most important points

  • If you move in yourself : Does the apartment suit me and my needs in terms of location, room layout, cut and size in the long term?
  • When buying a home as an investment: Is there a realistic forecast with regard to the increase in value and am I aware of the risks of renting out? Use our sample calculation under Sell ​​a rented apartment to calculate whether it is worthwhile for you to purchase an apartment as an investment.
  • Do all the contents of the sales contract correspond to my ideas ? Special examination of the community order and the declaration of division!
  • Is the financing on a solid basis ? Are unforeseen costs sufficiently taken into account?
  • Do I understand all of the homeownership costs ? Am I financially able to build up sufficient reserves for the maintenance and modernization costs of my private property?
  • Is the community of owners financially well positioned and will I get along well with the members in the long term?
  • Is the energy efficiency of the building in line with today’s standards?
  • Are the contents of the community rules and the house rules acceptable to me?
  • Can I finance any special levies that affect the common property?
  • If you are unsure about the fabric of the building or other building-relevant factors, consult a specialist / expert for safety.

Home Insurance

housing

If you only keep a few valuables in your apartment and are rather sparingly furnished, you do not necessarily need household insurance. And if you are sure that you can replace your household effects in the event of a burglary, you don’t necessarily need them either. But if you want to be on the safe side and also own valuable household items , you should consider such a policy. 

The most important facts about household insurance at a glance:

  • It covers the costs incurred due to vandalism damage in the household and replaces the replacement value . It also pays if the home furnishings are destroyed by fire.
  • The costs depend on the size of the house / apartment and where you live. If very high-quality items belong to the household items, the sum insured can also be increased.
  • Bicycles can also be insured upon request . Then the insurance cover also applies outside of the storage rooms belonging to the apartment.
  • In some regions, it can also make sense to add natural hazards to your insurance coverage . This covers, for example, flood damage to the home furnishings.

The most important terms for household insurance at a glance:

Amount of coverage /Sum insuredMaximum amount that the insurance pays in the event of a claim. It serves as the basis for the tariff calculation
Compensation limitMaximum amount that applies to individual valuables. It is usually limited to 20 percent of the sum insured, but can be increased for an additional charge.
DeductibleAmount that the insured pays himself in the event of damage
UnderinsuranceIn this case, the value of the contents exceeds the sum insured. In the event of damage, the insurer then only pays proportionally.
Underinsurance waiverIn order to avoid underinsurance, the sum insured is determined based on the living space.
Replacement valueAmount required to replace a stolen or damaged household item

What is important when it comes to home insurance? What you should consider when choosing a provider?

1. Compare home insurance

The tariffs for home contents insurance vary greatly depending on the provider – which is also due to the fact that the scope of services of the policies can vary significantly. It therefore makes sense to first carry out an offer comparison before concluding the contract as soon as the key data for the scope of insurance have been determined

2. What is insured through the contents insurance?

The household contents insurance covers the insurance customer’s belongings in his apartment and the associated rooms (cellar, garage, extensions, terraces). This includes household appliances, furniture, decorative items such as carpets, entertainment electronics and clothing , but also valuables such as jewelry . The kitchen equipment is also insured – provided it can be expanded again. In each case, the new value is replaced. 

Therefore, there is also talk of the replacement value. The insurance also covers the costs of disposing of damaged household items.

Even bicycles by members of the household are usually insured – but the insurance only comes on for replacement if they have been stolen from apartment belonging to closed storage rooms (basement, garage) and were also connected there. If bicycles are also to be insured against theft outside the insured premises, a surcharge must be paid for this. This insurance component is also referred to as the bicycle clause; as an alternative, separate bicycle insurance is an option.

Good to know:

Depending on the provider, the insurance cover sometimes also includes household items that are stolen, for example, from the car or from the hotel room of the insured person while on vacation. This component of insurance coverage is also known as external insurance .

Attention! 

The external insurance is usually limited to a maximum amount and only applies to household effects that are outside the insured home for a maximum of three months. A special case exists when children belonging to the household move out and move into a room in a shared apartment, for example due to an education away from home. However, if you set up your own household, it must be insured separately.

The insurance cover applies in the following cases:
  • Burglary / robbery
    Whether a break-in while on vacation or a robbery: the insurance covers the consequences so that stolen household items such as an expensive television can be replaced. The scope of insurance also applies to damage caused by vandalism – for example to furniture.
  • In the event of damage from fire, tap water or storms
    If, for example, furniture is damaged by leaking tap water, the insurance will pay for the replacement of the furniture . The renewal of floor coverings that can no longer be used due to such damage is also included in the scope of insurance.

3. What should you pay attention to when choosing home insurance?

The insurance premium alone should not be the decisive criterion when choosing home insurance . The following modules are particularly useful and should be observed:

  • Gross negligence
    A candle burns in the living room, is it forgotten when going to bed in the evening and there is fire damage? Then the insurance usually does not start at all or only to a limited extent not one , as gross negligence. However, if the insurance contains the “waiver of the objection of gross negligence” , the damage will be compensated.
  • Scope of fire damage
    Usually, damage caused by overvoltage or damage caused by smoke and soot formation, scorching or scorching is not covered. However, additional insurance cover for such fire damage can optionally be selected . Since overvoltage damage can cause expensive damage to high-quality computers or hi-fi systems, this module makes sense if such devices are present in the household.

The following modules may also be considered, but are not important for everyone:

  • Scope of insurance for valuables
    For example, anyone who keeps expensive jewelry at home or owns valuable antiques should check to what extent these valuables are also insured. As a rule, there is a limit of up to 20 percent of the sum insured . However, this can optionally be increased for an additional charge.
  • Water damage insurance
    This module is not a must, but it can be an option for owners of aquariums or waterbeds , as damage caused by leaking water is not considered tap water damage. The insurance covers damage that has occurred in the insured’s home, but not for consequential damage in neighboring apartments . The private liability insurance of the originator pays for the regulation of such damage .

4. How high should the insurance cover be?

Insurance coverage is based on the sum insured, which is also known as the sum insured . Damage will be compensated up to this amount. It usually results from the fact that a certain amount – usually 600 to 850 euros – is set per square meter of living space . Multiplied by the size of the apartment, this results in the sum insured. This can be between 52,000 and 68,000 euros for an 80 square meter apartment .

To prevent underinsurance, either the sum insured can be selected according to the insurer’s formula or the value of the contents is precisely determined and communicated to the insurer in the form of a tabular overview. In the event of damage, this valuation serves as evidence that there was no underinsurance.

In order to be able to provide proof of the replacement value in the event of damage , it makes sense to keep at least the invoices for expensive purchases. If a lot of expensive furniture or other high-quality household items are added during the contract period, the sum insured should be checked and increased if necessary. This is another way of avoiding underinsurance.

Important to know:

If you move , the insurer must be informed, otherwise the insurance cover does not apply to the new apartment . Both apartments are insured for a transition period – usually two months. Whether the insurance cover is cheaper or more expensive depends on the new place of residence and the size of the apartment. If this leads to a higher premium , there is a special right of termination of one month after the premium increase becomes known.

5. How do you change home insurance?

If the home insurance is to be changed, it is advisable to first take stock : Is the previous sum insured still sufficient or have expensive purchases been made in the meantime ? Accordingly, various offers should be obtained using a comparison portal.

Before taking out the new policy, it should be checked when the insurance can be changed at the earliest . Cancellation is usually possible at the end of the insurance year . How long the ordinary notice period is depends on why the notice is being given. If it is simply a matter of changing provider, a notice period of three months applies to the end of the contract. For example, if the contract year ends on November 30th, the cancellation must be received by the insurer by August 31st.

The situation is different if the tariff becomes more expensive . Then a special right of termination applies and the period is shortened to one month after receipt of the tariff increase. Extraordinary termination is also possible in these cases:

  • When couples move in together and both have home insurance. The most recently concluded contract can then be terminated . Important: If the contract continues, the partner must be entered.
  • After a claim settlement . However, it must be noted that the insurer withholds the premium. So it does not necessarily make sense to make use of the special right of termination in this case.
  • When moving , if the insurance premium increases due to a change to a less favorable tariff zone.

The insurer must be notified of the termination in writing – either by post or by email. For this purpose, comparison portals and some providers offer a switching service using a cancellation form that can be easily filled out. Sometimes the provider sends the cancellation directly to the previous insurer, sometimes the form can be used to print out the cancellation and send it to the previous insurer yourself.

6. What is an extended home contents insurance?

In general, household contents insurance is a so-called linked insurance because it takes effect when there are different risks. We are talking about an extended household contents insurance if the scope of insurance is supplemented by certain components – for example, a natural hazard insurance , bicycle clause or glass breakage insurance .

7. What role does glass breakage insurance play?

Damage caused by broken glass is usually not automatically covered by the household contents insurance. If the scope of insurance is to be expanded to include glass breakage insurance, the providers will charge a surcharge .

Glass insurance is not always necessary, but it can be useful for anyone who owns an elaborately polished wall mirror . Even if the apartment has a winter garden or there are large windows , this insurance cover can be worth considering. Important to know: The glass breakage insurance does not cover damage caused, for example, by neighboring children playing football. Parents’ liability insurance would be responsible for this.

8. Who is bicycle insurance suitable for?

If bicycles are to be insured against theft outside of the storage room belonging to the apartment , there are two options:

  • Extension of the household insurance to include the bicycle clause
    For an additional charge, the household insurance can be extended to include theft protection for bicycles. This is usually based on a certain percentage of the sum insured – usually one to three percent. For example, if this amounts to 50,000 euros and one percent is chosen, the insurer will reimburse a maximum of 500 euros. If the bike is more expensive, a higher percentage must be chosen.
  • Separate
    bicycle insurance For very high-quality bicycles, it can sometimes be worth considering taking out separate bicycle insurance. This insurance coverage is usually more expensive , but it is also more extensive and, for example, also replaces damage caused by an accident . However, it must be noted that it only applies to one bicycle, whereas the bicycle clause applies to all bicycles that belong to the household.

9. Who needs natural hazard insurance?

The contents insurance usually does not cover damage due to natural hazards . If you want to insure your inventory against damage from floods, earthquakes and floods , you must also take out natural hazard insurance. Whether this makes sense depends on where you live, since the probability of damage caused by natural forces varies from region to region. However, the higher the risk of natural hazards, the more expensive the insurance cover is . In many cases, the insurance conditions also provide for a deductible.

10. Does a household contents insurance apply in the event of burglary or theft?

If an apartment is broken into and theft and vandalism occur , the insurer will compensate for the damage at replacement value. The situation is different in the case of theft outside the home: If, for example, a handbag and cash are stolen in the restaurant, the insurance will not cover the damage. If, on the other hand, it was stolen under threat of violence, it is considered robbery – and in this case the insurer pays.

11. Is it possible to deduct home insurance from tax?

Since the household contents insurance is a property insurance and it does not serve to cover health and assets, it is usually not tax-deductible . An exception applies, however, if there is a tax-approved study in the household: In this case, the costs can be claimed proportionally.

An example: The insurance covers an apartment with 100 square meters of living space and a study of 10 square meters. Then a tenth of the insurance premium can be claimed in the tax return as business expenses (self-employed), business expenses (employees) or special expenses (for vocational training) depending on the use of the room.

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Expaturm aims to help educate Expats in Germany on key issues that they will have to deal with while living in Germany by providing everything you need to know about Banking, Healthcare, Lifestyle, and Housing in Germany
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