Information on Housing Costs in Germany

INFORMATION ON HOUSING COSTS IN GERMANY

We would like to give some information on costs related to housing in Germany. Once the lease contract is signed by both parties, tenant and landlord, the following payments need to be made: Estate Agent’s Commission / Maklercourtage + In Germany, the fee for the estate agent must be paid by the party who has ordered the service (which typically is the landlord, however, can also be the tenant). The fee is legally limited to a maximum of 2 months’ net rent (Kaltmiete) plus VAT (currently 19%). The fee is not legally allowed to include additional costs for utilities. The estate agent will send an invoice for the commission fee. Security Deposit / Kaution + The deposit is legally limited to a maximum of 3 months’ net rent (Kaltmiete). The deposit is not legally allowed to include additional costs for utilities in this amount. The deposit must be paid to the landlord. Commonly,security deposit payment are placed into a savings account. There will be no separate invoice for the deposit and the amount is stated in the lease contract. The security deposit is returned after the end of the lease, as long as no claims have been lodged against the tenant. The security deposit will include interest if the deposit was paid into a savings account. The landlord should return the security deposit within the six months after lease termination. Ongoing payments which need to be made on a monthly basis: Monthly Rent / Monatsmiete + The monthly rent is usually paid in advance, typically by the third day of each month at the latest. Most landlords insist on standing orders (Daueraufträge) as the form of payment. Associated Lease Costs and Utilities / Nebenkosten The landlord is legally allowed to pass on utility/associated lease costs to the tenant. Typical costs are as follows: + Water, sewage disposal, general light/power in common areas of the building, garbage removal, real estate tax, street cleaning, chimney sweep, insurance (for the property), caretaker, garden maintenance, snow and ice removal, lift, communal antenna, communal washing unit, house cleaning and pest control in communal areas, maintenance fire extinguisher, tank, etc., cleaning pavement, heating, warm water, electricity, cable TV, maintenance heating, and warm water units. There are four different ways to calculate lease costs and utilities: 1. In some cases (e.g., furnished apartments or short-term leases) the associated lease costs and utilities are calculated as a lump sum and will be paid every month with the rent to the landlord. As it is an all-inclusive sum, the landlord will not present a final invoice stating actual amounts and the detailed list of the maintenance costs after one year. As this is an all-inclusive sum, the landlord is not allowed to increase or reduce the associated lease costs. However, the landlord is entitled to increase the rent according to legal provisions. 2. In a few cases (e.g., furnished apartments or short-term lets) the associated lease costs and utilities are calculated within the rental payment and are not stated separately. In those cases, it is not distinguished between rent and associated lease costs and utilities, but just one amount (gross rent).

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INFORMATION ON HOUSING COSTS IN GERMANY

3. The tenant pays an estimated pre-payment every month with the rent to the landlord. These costs are mentioned in the rental contract. The total payment will be adjusted at the end of the year according to the actual costs and the tenant’s usage, unless otherwise agreed. The tenant will either have to pay the difference or will be reimbursed for overpayment. 4. For some costs, the tenant often has to sign their own contract directly with utility providers. This often applies for direct energy costs. In most cases the tenant pays monthly, bi-monthly or quarterly instalments and receives a balance according to actual usage once a year. The tenant will either have to pay the difference or he will be reimbursed for overpayment. General costs by property type: + Unfurnished properties: generally, a mixture of option 3 and 4 applies + Unfurnished apartments: generally, option number 3 applies plus number 4 (direct energy costs) + Unfurnished houses: generally, option 4 (tenant has to sign their own contracts for direct energy costs and further costs, e.g. garbage removal, street cleaning). Only a few costs are covered with option 3 (e.g. tax, insurance) For both options 3 and 4, please note: these are not the actual monthly costs but only estimates. Thus, it is not possible to calculate the actual usage costs at the beginning of the tenancy. At the start of a lease its typical to only know which procedure applies (option 3, 4 or a mixture of both) and an estimate of utility costs provided in the draft of the lease contract. We recommend calculating approximately €2.50 – €4.50 per square meter of living area for additional costs to the net rent, depending on family size, kind of property, location in Germany, and individual living habits. Please note this is only general information which may vary. Please keep in mind that these costs are in addition to the monthly rental payments. We kindly ask you to be aware that in Germany energy prices may be considerably higher than in your home country. Further services and costs (not part of the rental agreement): + Rundfunkbeitrag: This is a mandatory license fee for broadcasting services which must be paid by every household in Germany. The fee serves the principle “one flat, one fee”. This license fee must be paid for every flat/property. This is regardless of how many people live there or how many broadcasting capable devices (e.g., TV, radio, computer, tablets, mobile phones) they have or use or if the broadcast service is used at all. This is also valid for foreigners who do not make use of these services. + Individuals sign contracts for, and pay the cost of, personal telephone, internet, and mobile phone services + Individual sign contracts for, and pay the cost of, private liability and household content insurance (if applicable)

*Please note that by German law Dwellworks GmbH is not authorized to give legal advice. Therefore, the above information is based on our previous experience in this regard.

© Dwellworks GmbH

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v. 2018