Property Ownership Costs

• Property tax

  - Municipalities impose an annual tax on land and property, known as Grundsteuer. The tax is levied on the assessed value of the property, using the basic federal rate of 0.35% as a starting point. ‘Multipliers’ are then applied to this figure to calculate the final tax due. This multiplier varies by municipality, but the average multiplier for residential properties is 1.5%.

• Lettings and management charges

  - Specialist companies and estate agents offer property management services, including cleaning and maintenance. They may also offer a tenant-finding service for you, at an extra charge.

• Communal charges

  - Variable depending on the size and type of property

• Utilities

• Building insurance

• Garden maintenance

Landlord obligations

German law generally favours the tenant. Rents and rent increases can be freely negotiated and agreed upon, though the landlord will be fined if, in a time of limited housing accommodation, he demands rent in excess of 20% above the rent charged for comparable premises. A rental contract may contain graduated rent increase clauses or indexation clauses, but the rent must remain unchanged for at least a year. Furthermore, the tenant must be informed, in writing, when an index-linked increase is due.

When drawing up a tenancy agreement, a landlord generally has two options, 'limited' or 'unlimited' contracts. Unlimited contracts are the most common form of agreement as limited contracts can only be limited for very good reason.

Landlords in Germany are able to give two types of notice to tenants, under specific conditions:

• `Ordinary` notice - This is only applicable to unlimited contracts and can only be given for the following reasons:
  o    The tenant is manifestly in breach of contract;
  o    The landlord needs the premises for himself or his family;
  o    The lease contract prevents the landlord from making an economically justifiable use of the premises.
• Immediate notice`, which is normally given for breaching a specific contractual duty e.g., default of payment of rent or using the property outside the terms that were granted. In this case the contract terminates with immediate effect.

Tenants can object to notice if terminating the lease would cause "unjustified" hardship for himself or his family regardless of the landlord’s legitimate interests.
Landlords wishing to terminate a contract under 'ordinary notice' must give between three and nine months' notice. However, the tenant does not need to give justification to terminate and generally has to give three months’ notice.

Inheritance Tax

German inheritance laws can be complicated so it is always advisable to seek expert assistance from a lawyer. Net inheritance tax varies from around 7% up to 50% depending on the age of the beneficiary and his relationship to the deceased. Exemption for spouses is highest, currently €307,000 (£240,000 approximately). Children, parents, siblings, divorced partners and others are also granted exemptions, though at lower rates than spouses.

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