Real estate commission in Germany, deposit, down payments and side cost

REAL ESTATE AGENT COMMISSION IN GERMANYY

...No longer applicable - at least in most cases.

When contracting for an apartment or house you were usually required to pay a commission for the services of a real estate agent. Up to June 2015, 95% of all apartments and houses for rent were offered via real estate agents, because the future tenant was basically forced to pay the real estate agent's services, although they actually do serve the landlords. The commission was (and is for specific cases) maximum 2,38 cold rents of the apartment/house.

However, from June 2015 onwards a new law has become effective ordering the landlord to pay for the real estate agent's services. Only excemption, the tenant explicitly orders the services and in such case, the real estate agent cannot show apartments he has in his portfolio already. It must therefore carefully be reviewed if a search order is worth its price.

DEPOSIT

Whether unfurnished or furnished, landlords will require a security deposit to be paid. The amount will usually be between 1 and 2 monthly cold rents and is paid into a bank account that is lawfully yours but on which the landlord as withholding rights.

After moving out the landlord has to repay the deposit to you within a years time, but usually, it will be repaid after 2-3 months. The landlord is allowed to substract any cost occurred to repair damages caused by you during your stay in the apartment / house.

DOWN PAYMENTS FOR REMAINING FURNITURE

Sometimes, when going for an unfurnished apartment, furniture will be sold by either the current tenant or the landlord. Usually, that will be small furniture like a dishwasher, inbuild lamps or curtains fitted. Sometimes, it is the whole kitchen. If you want the apartment you will basically be required to buy it, although you can negotiate a little on the amount. The furniture is yours thereafter and you can sell it to the next tenant when moving out.

It remains to be seen what impact the new law on commission payments will have on the down payments, but we do not expect too much change. Prices are usually reasonable, especially when comparing to market prices of the furniture alone. Allowed is a maximum 50% margin on the current value of the item sold.

Typically the following items are sold on:

kitchen furniture
kitchen electronics
window blends
lamps
carpets or other flooring put by the prior tenant
bathroom furniture
in-built closets

For some of those it is relatively easy to find out prices for new items and a devaluation over time needs to be assumed. For kitchen electronics the life time is usually presumed 5 years, anything else around three years.

SIDE COST

The rent indicated in any expose is usually split into "cold" rent and side cost, or "Kaltmiete" and "Warmmiete" (the latter being the sum of cold rent plus side cost).

Side cost are such cost related to inhabiting/operating the apartment: consumption of heating, maintaining the heating system, waste disposal, cleaning of the staircase and public ways, maintaining of any greens, insurance premiums for fire insurance, maintaining of the lift, lighting of the staircase, a joint TV antenna or satelite dish, internet broadband, a join washing machine or the-like. Some of the side cost are born by the landlord on behalf of the tenant throughout the year. In order to reduce the risk of non-payment by the tenant, the landlord is entitled to request a monthly lump sum covering the presumed actual side cost.

Once a year, the landlord has to provide a calculation showing in detail what the side cost were made of in the last year. Electricity and water are usually side cost which are born by the tenant directly, ie. he contracts with the providers directly.

Side cost calculations should be reviewed carefully as not all costs are allowed to be shifted onto the tenant's shoulders. Not allowed for deduction are

cost of maintaining the apartment in its state (facade renewal, heating system exchange, staircase renovation, window replacement etc)
cost for administering the apartment (accounting fees, tax advise fees, marketing cost, expose cost etc)

Usually, the amount of the side costs is correctly calculated in the expose, or at least once you enter into serious negotiations as the landlord is neither interested in having to reimburse a huge by the end of the year.

When renting a furnished apartment the side cost are usually dealt with by a general lump sum which will not be subject to a review of the actual consumption, thus you pay the lump sum and that's it. However, the rental contract needs to be read carefully as whilst it may sound like a lump sum in the exposé it may be different in the contract!