Rental contracts in Germany: Everything you need to know

Rental contracts in Germany: Everything you need to know

Whether you’re moving into a new apartment or planning to rent one out, there are a few things to consider before signing a lease. Our practical guide to German rental contracts has got you covered.

27 FEBRUARY 2023

21 min read

You might have heard horror stories about apartment hunting: 200 inquiries, 10 apartment viewings, and only one offer. Finding a rental apartment in cities like Berlin or Munich is challenging — so, it’s no wonder some people barely look at the lease agreement when they finally get to sign. The important thing is to have found a place, right? Actually, there are a few rules and regulations landlords are obligated to follow. That's why you should go through your rental contract with a fine-tooth comb before signing it, and in this guide, you'll learn what to look out for. From different types of rental agreements and legal clauses and obligations to minimum rental periods — we've got you covered!

What is a rental contract?

A rental contract is a contractual agreement between two parties that defines the rules of renting an apartment. The two parties are the tenant and the landlord, who can be either the apartment owner or a property management company. As a tenant, you pay monthly rent for using the owner’s property, such as a house or an apartment. In Germany, you pay the full rent on the first of each month. The rental contract specifies essential points such as the move-in date, the monthly rent amount, the deposit amount, the utility costs, the terms of use, and the termination clauses. We’ll discuss all of this in more detail later on in this guide.

Where do I get a rental agreement in Germany?

Generally, your landlord issues the rental contract and sends you two printed copies by mail for you to sign. You keep one signed document and return the other to your landlord. Some landlords send the rental agreement by email to clarify any questions you might have beforehand. You might even sign the contract in person, for instance, if it's a sublease in a shared apartment. If you own property and want to set up a rental agreement, you can find countless templates in German online — for example, this pdf by the Mieterschutzbund (Tenant Protection Association). If you're looking for a Word document version, check out this template by immoscout24, a popular property rental platform.

When do I have to sign a rental agreement?

Regardless of how you receive the rental contract, read through it thoroughly before signing it. That's especially important if you haven’t viewed the apartment or house yet. Don't let yourself be pressured into anything — a false sense of urgency can be a sign of a rental scam!Also, remember that you're not obligated to sign a lease. If the terms seem shady, always get a second opinion, for instance, from a lawyer or a native German speaker. Some landlords exploit the housing shortage and include conditions that are ridiculous or even unethical. On top of that, the contract might not cover some of the points that are important to you. Let’s say you plan to take a sabbatical or do an internship abroad. In that case, you might want to sublet your apartment. If your rental contract doesn’t include any information about subleasing, find out if your landlord is generally ok with this and what the terms would be before signing.

What types of rental contracts are there?

Rental agreements can look different depending on the situation. Here are the main options in Germany:

Open-end lease: As the name suggests, an open-ended lease agreement has no end date. So, you can stay in the apartment as long as you want. Just like any other contract, an open-ended lease agreement can be terminated by both parties within a given timeframe.
Fixed-term: Fixed-term agreements terminate automatically after a specific period, so you already know when to plan your next move. In Germany, fixed-term contracts are only legally binding if the landlord has valid reasons. You’ll learn more about this below.
Sublease: Need to save money on rent and sublet a room in your apartment? Then you’ll have to set up a sublease agreement. As the main tenant, you keep your existing contract with your landlord and sign an additional rental contract with your subletter-slash-roommate. Keep in mind that living with another person can increase your electricity bill and other utility costs.
Short-term rent: If you’re a digital nomad working from abroad for several months a year, one way to keep your apartment is to offer it for rent short-term. Or maybe you already terminated your contract and plan to let the apartment for the remaining months? Either way, this is a situation for a short-term rental contract — provided your landlord agrees.
Step rent: Landlords can raise the rent at specific intervals. With step rent agreements (“Staffelmiete” in German), the annual increases are agreed on when you sign the lease — your contract specifies the amounts for the next several years. The advantage: You know exactly how much money you need to budget, and the amount of your increased rent is carefully controlled. The disadvantage: Your rent keeps increasing automatically, even if the housing market slows down.
Indexed rent: Indexed rent doesn’t follow the rent index that applies to your neighborhood. Instead, it uses the Consumer Price Index (CPI) as a reference, which is based on the general living costs in Germany. If the cost of living goes up, your landlord can increase your rent accordingly once a year.
Verbal agreement: You can also make a verbal rental agreement (except for fixed-term agreements of 12 months or longer). This rental contract is only valid if your landlord makes you an offer that you explicitly accept. They also have to state essential details such as your name and the monthly rent. If you want to terminate the contract, it must be in writing. Tip: Even though verbal agreements are legal, always choose a written contract to avoid rental scams.

Rental contract for an apartment

The German Civil Code (Bürgerliches Gesetzbuch, or BGB) lays down the rules for residential lease agreements. According to the BGB, rental agreements have to favor the tenant and not give landlords an advantage. However, the devil is usually in the details, and a lawyer or court might interpret a rental contract differently depending on the specific wording. That’s another reason why you should go through the rental contract in detail to clarify any vague words and phrases. The more accurate the terms are, the less potential there is for conflict later on.

Rental contract for a house

Rental contracts for houses are only slightly different from those for apartments. They usually have a few more obligations, such as removing snow in front of the house. Since your landlord can't divide the ancillary costs of single-family homes among several parties, you might have to set up contracts with providers yourself. However, this might actually benefit you — you have full control of the costs and, depending on your chosen provider, could save money on the gas bill and other utilities.

Rental contract for a garage

In large cities, an underground car park can be a huge bonus. Some landlords offer rental contracts that include a parking space in the building's underground parking. However, it usually makes more sense to set up a separate agreement for the parking space. This way, you can easily terminate the contract if you want to reduce your spending or sell your car. Note that this type of contract doesn’t come with extra protection, which means cancellation periods might be shorter. Tip: If your rental agreement includes a parking space that you don't need, you can ask permission from your landlord to sublet the space to someone else.

Rental contract for carports

It’s a good idea to sign a separate contract for carports, too. If your rental agreement already includes a carport you don't need, you can also sublet the space. Rental agreements for carports are governed by common law, so the landlord must pay cosmetic repairs, operating costs, and similar expenses. Note that you can only use a carport to park vehicles, such as a car or camper van. By the way, besides residential property lease agreements, there are also commercial agreements. For example, if you want to start your own business and rent commercial spaces for your store or warehouse, you need to sign a non-residential lease agreement.

What does a German rental agreement look like?

In Germany, rental contracts are usually a few pages long, divided into paragraphs, and then subdivided into articles. Which regulations apply and how they’re phrased depends to some extent on the landlord and the space that you’re renting. However, there are a few elements that rental contracts have to include. Here’s an overview so that you know what to expect:

What does a German rental contract have to include?

Personal details: The rental contract must include both parties' full names and addresses. If the owner hires a property management company, the lease should state the names of the owner and their representative.
Details of the rental property: The lease agreement must include the address, how large the rental property is, and the number and type of rooms. In the case of apartment buildings, it should also specify which floor and side of the building the apartment is on, plus the apartment number.
Rent payments: The rental contract puts down in writing exactly how much the cold rent ("Kaltmiete," which is the base rent without ancillary costs) and the warm rent ("Warmmiete,” which is the base rent plus ancillary costs) is. It should also list the bank account details where you need to transfer the monthly rent payment.
Deposit: The deposit is a type of security. You transfer it to your landlord when you move in and get it back when you move out — as long the apartment is in good condition. Usually, the deposit is three times the net cold rent. Instead of transferring the money directly to your landlord, you can also set up a rental deposit account together.
Type of rental contract or rental period: As mentioned, there are different types of rental agreements. Your rental contract must state what kind of tenancy it is. If you have a fixed-term contract, it must include both the start and end date.
Termination clauses: Does the standard legal notice period apply? Or is there a clause that you can only terminate the contract after a given timeframe? Check this information carefully to avoid any unpleasant surprises!
Residential or commercial use: The lease agreement must state whether the space is for residential or commercial use. You can only operate a business in the space if you have a commercial contract. But don’t panic: This rule doesn't apply if you work from home or as a freelancer.
House rules: When you use someone else's property, you should treat it respectfully. The house rules give you a better idea of what to pay attention to, such as airing out the rooms (“lüften” — it’s a big deal in Germany, trust us!), separating the trash, and respecting quiet hours.

And what about repairs? Some landlords include clauses that you’re responsible for paying for minor repairs up to a certain amount per year. But, they can't choose the amount arbitrarily and have to follow the guidelines of the Tenant Protection Association. Generally, the landlord pays for cosmetic repairs, such as renovating the apartment after you move out — unless they included a specific clause in the contract that leaves you responsible. Many landlords make use of this clause to save time and money. However, if your contract doesn’t state that you're responsible for cosmetic repairs, then you don't have to worry about it.

How are the ancillary costs listed?

Your monthly rent generally consists of the cold rent and the advance payment for the ancillary costs. Note: Your contract must explicitly state the operating or ancillary costs and the amount. The list can look like this:

heating costs
water supply and sewage
janitor
garbage disposal
garden maintenance
…

Total: €140 per monthRemember: You don’t have to pay for operating costs that aren’t in the contract. To learn more about the different costs and how they’re divided among tenants, read our guide to ancillary costs.

What to watch out for in a German rental contract

As a tenant, you should check the following details in your German rental contract:

Are the details correct? These include the name and address, the size of the rental property, the monthly rent, the number and description of the rooms, and the start date. Pay extra attention to the property size (stated in square meters). Estimates aren’t legally valid. Furthermore, cellars aren’t considered part of the living area, and only 50% of the balcony can count as a living area. You can claim a rent reduction if the actual property size is smaller than the estimate, as long as the discrepancy is at least 10%.
Is it clearly stated if the property is for commercial or residential use?
Are there any restrictions on subletting?
Is the rent amount in line with typical rents in that area? This doesn’t apply to indexed rents.
Are there regulations about rent increases? Remember: Landlords may increase the rent every 12 months and only up to 20% every three years. In the case of step rent agreements, the rent rises automatically by the amount stipulated in the contract.
Are the ancillary costs listed individually? Can your landlord divide all of them among the tenants, or do they have to pay some themselves?
Are there specific regulations about terminating the contract, e.g., a minimum rental period?
For fixed-term agreements: Are the reasons valid, and does the contract state the end date?

What obligations do tenants have in Germany?

Once you sign the lease agreement, you must transfer the monthly rent on time. You also need to pay the deposit and respect the house rules. For example, if you want to get a dog, you might need your landlord's approval.Speaking of approval: You're only allowed to do construction work with the explicit agreement of your landlord. So, before taking down a wall to enlarge the kitchen, talk to your landlord — it's their property, not yours. This rule doesn’t apply if you’re installing a kitchen, but you might have to dismantle it when you move out. And if your landlord provided you with a standard stove and sink but you stored it in the cellar and bought your own appliances, you have to put everything back in place before you move.

Which rental clauses are invalid?

As mentioned, landlords can put several clauses in the rental contract, such as for minor and cosmetic repairs. There are a few regulations, though, that aren’t legal in Germany — you can ignore them. Here are a few examples:

“On top of the security deposit, you must have a co-signer or leave a deposit for the keys.” → The deposit can be up to three times the net cold rent, not more. Additional security amounts aren’t valid.
“You must get private liability insurance and present it to your landlord” → Nope! Even though everyone should have this type of insurance for their own protection, you’re not obligated to get private liability insurance in order to rent an apartment or house.
“You can only terminate the rental contract after six months.” → The legal period of notice that tenants have to give is three months. And to protect the tenant, the notice period for landlords can be even longer.
“You can play an instrument for a maximum of 1 hour and only on work days between 3 and 6 p.m. ” → This clause is invalid — you can play an instrument for more than an hour, and you just need to respect the quiet hours that are given in the house rules.
“You can’t have any pets.” → This clause is also invalid. You can have small animals, such as hamsters or fish, even without your landlord’s explicit approval.
“The landlord does not have to remove defects that you notice shortly after moving in. ” → Quite the opposite: You're entitled to a fully functional apartment!
“You have to carry out cosmetic repairs every three years.” → Not true! Your landlord is only allowed to stipulate that you must renovate the apartment when you move out.

Note: There are other specific clauses (known as “Formularklauseln”) that your landlord can discuss with you upfront and add to the contract if you both approve.

What do I have to consider as a landlord?

Thinking of buying a house to rent it out? If you want to set up a lease agreement, consider consulting a lawyer beforehand, and only use templates from legitimate sources. As a general rule, rental contracts have to be fair and tenant-friendly. There are also several clauses that are illegal — even though everyone uses them. For instance, you can’t add your bank fees to the list of ancillary costs. And if you choose a fixed-term contract, you must have legally valid reasons. According to § 575 of the German Civil Code (BGB), a fixed-term lease is only legal if you have one of these plans for the property after the fixed-term period is over:

You, family members such as your parents, or household members such as an au pair want to move into the apartment.
You want to demolish the building or start a construction project that will make it impossible for anyone to live there.
You want to rent the apartment to someone who has to provide a service, such as an employee of a construction company. The apartment will then be considered as company housing or service accommodation.

What are the landlord’s obligations?

As a landlord, you'll enjoy a regular monthly income, but you also have some important obligations. Starting in 2023, landlords have to file a property tax return. On top of that, you have to prepare the annual bill for utility costs, and you need to take care of the maintenance of the building. Renovation or regular repair costs, e.g., for the railing in the hallway, are your responsibility, too. And if your tenant spots problems with the property that they didn’t cause, you have to fix those and pay out of your own pocket. Luckily, some of these expenses are tax-deductible!

Canceling a rental contract in Germany: What you need to know

The legal period of notice for a rental contract is three months. As a rule, your cancellation has to be in writing. And if you’re moving in together with someone and you’re both main tenants in the rental contract, then both of you have to sign the cancellation letter. Read our guide to terminating a rental agreement to learn more.

How long do I have to change my mind about a rental contract?

Changed your mind or got a better offer? Unfortunately, you can't just withdraw from a rental contract once you’ve signed it — it’s legally binding. There are a few exceptions though: If you didn't view the apartment or your landlord concealed defects that the apartment has, you can withdraw from the contract within 14 days.

How can I get out of a contract with a minimum rental period?

From a landlord's point of view, it makes sense to set up a lease agreement with a minimum rental period. After all, it’s quite a hassle to create rental ads and check Schufa scores as well as other documents of applicants.A standard minimum rental period is between 12 and 48 months. However, it can only be up to four years. But even if the minimum period in your lease is just 12 months, things can change in the blink of an eye. Maybe you change careers and need to move to a different city. Or you're having a baby and need a bigger place. Even defects are a valid reason to terminate your contract early.One option to get out of a contract early is to set up a termination agreement between both parties. The downside is that your landlord can claim compensation for any costs that your untimely termination caused. Alternatively, you can ask your landlord if they agree to an interim solution, such as a short-term lease agreement with a third party. This way, someone else can stay in your apartment for the remainder of the lease period, and you save a few months' rent.

Who needs to move out if there are two main tenants?

Whether you’re in a relationship or share the apartment with friends, if several people are listed in the rental contract, they can only cancel it as a group. In shared apartments, having one person as the main tenant and setting up sublease agreements with the other roommates helps to avoid that. This option also works well for couples — for instance, if you want to try living together first before going all in. Canceling together doesn’t necessarily mean you both have to move out. If the landlord considers one person’s salary sufficient, they can set up a new lease agreement. So, the decision about who stays in the apartment is basically up to the landlord. And if you’re getting a divorce? In this case, the family court might allocate the apartment to one of the divorced parties.

How do I get out of a rental contract if I split up with my partner?

Broke up with your partner and want to move out? If you're both the main tenants, you can only terminate the lease agreement together. It’s then up to the landlord if you or your ex-partner are able to keep the apartment under a new contract. Of course, one of you can move out but remain on the lease agreement. That, however, could mean legal issues later on. For example, if you move out but your ex-partner can’t pay the rent alone, the landlord can legally claim payment from you. One way to protect yourself is by setting up an agreement under private law between you and your ex. If you have trouble coming up with the right phrasing, consult a lawyer, the Tenant Protection Association, or a native German speaker. Divorce, however, is a different matter. Once the court has issued the divorce decree, you can send a copy to your landlord and automatically leave the rental contract.

What else is there to know about rental contracts in Germany?

We’ve already covered a lot of information about rental contracts in Germany — but if you’re searching for more, here are answers to some frequently asked questions.

What happens with the rental contract when there is a new owner?

No matter how long you've lived in your apartment, your current rental contract remains valid, even if the owner changes. That means that you don't need to worry about an immediate termination or a rent increase. However, according to § 577a of the German Civil Code (BGB), the new owner can claim their right to move into the flat after a grace period of three years — provided they bought the apartment when you already lived there. On top of that, the reasons for terminating your contract must be legally valid.

**What does “hilfsweise zum nächstmöglichen Zeitpunkt” mean?**

The German phrase “hilfsweise zum nächstmöglichen Zeitpunkt” might crop up in your rental contract. This means "alternatively, on the earliest possible date" and refers to the termination date of the rental contract. It applies if the landlord didn’t add a definite end date in the agreement, for example, or if the end date was incorrect.

What happens when a fixed-term lease agreement ends?

As long as the landlord's reasons in the fixed-term lease agreement are valid, you have no choice but to move out once your contract ends. There’s one exception though: If the reasons don't comply with the German Civil Code, you're in luck! In this case, you can stay in the apartment for as long as you want.Want to learn more about moving to Germany? Check out our blog and discover tips on saving energy in your home and how to budget for household expenses. And with the help of our moving cost calculator, figure out exactly how much money you need to put aside for the big day.