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Calculating & understanding rent in Berlin & Germany

Posted by investabcom on July 21, 2016
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For any prospective owner or investor, calculating & understanding rent in Berlin & Germany is first step towards making sure the rent will cover costs and that the investment makes sense.

A good starting point: ortsüblichen Vergleichsmiete

If the area you are looking into is a bit new to you as an investor, you can start to compare similar properties in the same building or in the same district. Here are a few elements to get an accurate calculation of rent in Germany.

  • Property type
  • Surface
  • Layout
  • General condition
  • Home fittings (bath tub, fitted kitchen, etc.)
  • Location

This will give you a first estimate of what much you can expect in terms of price per sqm per month.

Understanding the Mietspiegel

To further refine the first estimate of a rent for a flat or house, it is advised to look at the Mietspiegel, also known as Mietrichtwerttabelle. This is a broadly recognized indicator of the recent evolution of rent levels across the region or the city and what’s reasonable to expect. More importantly, it also states how much the rent can be increased through a negotiated agreement between the city and landlords’ interests groups.

The figures from the Mietspiegel is the best reference to increase rent on an already running rental contract in Germany. It can increased to the average rent value in the local district (Vergleichsmiete).

In Germany in general, one can increase rent 20% every 3 years depending on the Mietspiegel. However, a newly passed law has stated in 2013 that some cities are protected areas (Ballungsgebiete) and the increase is caped there (Kappungsgrenze). Those cites are Berlin, Düsseldorf, Hamburg & Munich. For Berlin for example, this limits the increase to 15% every 3 years. It is however recommended to not increase to exactly 15% but stay under at 13% or 14% to be sure to match authorized prices.

Example:

  1. Your property currently has a rent of 9 € / m2 with no increase the past 3 years
  2. The local average rent(Vergleichsmiete) is at 10 € / m2.
  3. A 15% increase means 10.35 € / m2, above the authorized cap
  4. A 11,11% increase will match the 10 € / m2 limit

Since 2015, a new law has been passed to slow down the exponential rent increase in some areas (Mietpreisbremse). This law concerns new rental contracts when changing tenants. The new contract cannot increase the rent price by more than 10%.

Notable exception for newly-built or renovated properties

This cap doesn’t apply on new buildings when signing a contract with the very first tenant (Neubaueigentumswohnungen) or old buildings that have been completely renovated (Anschlussvermietung).

Rent increase after a change in utilities costs (Betriebskosten)

Each year, a calculation is made of all utilities you paid (jährlichen Betriebskostenabrechnung). If that amounts is higher than what you received from your tenant (monatliche Vorauszahlung), you are entitled to claim the difference.

To avoid this situation every year, you can increase the rent to cover the increase in utilities depending on the property management’s economic plan (Wirtschaftsplan des Hausverwalters).

Other increase possibilities in some conditions

It is sometimes possible to apply a yearly increase to the rent in Germany

Graduated rent (Staffelmiete)

With the Staffelmiete, the rent increase will be planned in advance for a number of years. It can be done through a pourcentage of the base rent (Grundmiete) or through an exact added sum in euros every year.

Rent increase with price index (Indexmietklausel)

In that case, rent is increased depending on the evolution of the consumer price index (Index der Verbraucherpreise) if that index has evolved of at least 3 points. This condition can be risky if that index decreases; the rent will decrease with it. (Index der Verbraucherpreise de Berlin).

We hope that this overview helps you understanding and calculating rent in Berlin & Germany. Do get in touch with us if we can assist you in your rental investment project.

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