Buying a let flat in Berlin

Investment or own use

For two buyers, the same flat is two different deals. The investor buys a running tenancy agreement. They calculate with the rent, claim interest, depreciation and the costs that cannot be passed on to the tenant as income-related expenses, and usually hold the flat for more than ten years so that a later gain remains tax-free (ten-year holding period, Spekulationsfrist).

The owner-occupier buys a flat they cannot move into today. Let flats are often cheaper than empty ones, precisely for that reason. Whether this pays off depends on when the tenant moves out, and nobody can predict that. If you need to move in yourself in three years, you should not buy a let flat that is being sold after a conversion.

A middle way: you buy the let flat as an investment and plan to move in only when the tenant leaves of their own accord. That works if your financing also holds up with today's rent.

The tenancy agreement comes with the flat

A sale does not end a tenancy. With your entry in the land register, you step into the existing tenancy agreement, with all rights and obligations (§ 566 BGB). The rent deposit also passes to you (§ 566a BGB). So before the notary appointment, ask for:

• the tenancy agreement with all addenda and agreements, including oral ones, as far as the seller knows of them
• the rent increases of recent years, with date and reasons
• proof of the deposit and where it is held
• the last service charge statement to the tenant
• indications of disputes, rent reductions or arrears

Check whether a graduated or index-linked rent has been agreed. Both determine how your income develops over the coming years, and largely rule out increases based on the rent index (Mietspiegel).

Own use and bar periods

Own use is a legitimate interest that permits termination (§ 573 para. 2 no. 2 BGB). For flats converted into individual ownership after the tenant moved in, § 577a BGB postpones this termination. Nationwide, it is three years from the sale. The federal states may extend the period to up to ten years, and Berlin has done so for the whole city. The Termination Protection Clause Ordinance of 13 June 2023 applies until 30 September 2033.

The ten years count from the first sale after the conversion, not from your purchase. If the flat was first sold seven years ago, three years remain. When that was is shown in the land register and in the sale documents.

A trap for buyers who buy together: if several people or a company acquire a let house, the bar under § 577a para. 1a BGB applies even without a conversion. Buyers who belong to the same family or the same household are excluded.

After the bar expires, the normal notice periods of three to nine months apply, depending on the length of the tenancy (§ 573c BGB). The tenant can also object to a termination if it would mean undue hardship for them (§ 574 BGB). If the tenant did not use their right of first refusal at the first sale, they cannot make up for it later.

Right of first refusal, moving in by agreement and financing

If you buy a flat at the first sale after conversion, the tenant can take over your contract. They have two months after the seller has told them the content of the purchase contract (§ 577 BGB in conjunction with § 469 para. 2 BGB). If they exercise the right, they buy on your terms, and you are left with nothing. Your costs for the financing commitment or a valuation are then lost. So ask beforehand whether it is the first sale after the division.

If you want to move in earlier than the law allows, you can only come to an agreement with the tenant. Some tenants move out in return for a payment or help finding a new home. Such a termination agreement is voluntary. Do not count on it until it is signed, and have a lawyer draw it up.

When financing an investment property, the bank looks at two things: whether the rent covers a good part of the instalment, and whether your other income is enough if the rent ever stops. Then there are the costs you cannot pass on. Also plan a reserve for vacancy between two tenants and for repairs in your flat, because the owners' association's maintenance reserve covers only the common property. More on this under Mortgage financing in Berlin and Equity when buying a property.

Rent cap and rent increases

Two rules limit what the flat will earn in future. On a new letting, the rent in Berlin may be at most ten per cent above the local comparative rent (§ 556d BGB, Berlin Rent Limitation Ordinance, valid until 31 December 2029). Exceptions apply, among others, to new builds and after comprehensive modernisation; details are in the guide Rent cap in Berlin.

In an ongoing tenancy, the rent may rise to the local comparative rent if it has been unchanged for 15 months (§ 558 para. 1 BGB). In addition, the increase limit applies: in Berlin at most 15 per cent in three years. The lower of the two values is decisive.

Example values. The local comparative rent for a specific flat comes from the Berlin rent index; our Rent calculator Berlin works it out for an address.

Calculating yield: multiplier and gross rental yield

Two figures are enough for a first comparison. The price-to-rent multiplier tells you how many annual net cold rents you pay for the flat: purchase price divided by annual net cold rent. The gross rental yield is the inverse as a percentage: annual net cold rent divided by purchase price, times 100.

Both are only a start. The gross rental yield leaves out the additional purchase costs and the costs you bear yourself as a landlord. That is why the example also works out the net rental yield.

Example values. Additional purchase costs: 6.0% real estate transfer tax, 1.8% notary and land register, 3.57% agent's commission. The €130 a month come from the service charge example in the guide Buying a flat.

Think about the future too. If today's rent is well below the rent index (Mietspiegel), it rises only in steps of the increase limit. If it is above, it may fall on a change of tenant because of the rent cap. Both change the yield. So ask for the rent per square metre and compare it with the local comparative rent for location, year of construction and fittings.

For comparison: for whole multi-family buildings in Berlin, the multiplier was most recently 21.1 years' rent, measured at the middle of all notarised sales (analysis of transaction data from the valuation committee). Owner-occupied flats are more expensive per euro of rent because they are also sold to owner-occupiers. Values by district are on the page Price-to-rent multiplier Berlin, and a detailed guide is at Flat as an investment property.

Depreciation in brief

As a landlord, you may depreciate the building share of the purchase price over the years. The plot share does not count. The rate depends on the year of construction (§ 7 para. 4 EStG, German Income Tax Act): 2 per cent a year for buildings completed between 1925 and the end of 2022, 2.5 per cent for older ones and 3 per cent for buildings completed from 2023. A proportionate share of the additional purchase costs increases the base.

Besides depreciation, the interest on the loan, the costs that cannot be passed on and repairs in the flat count as income-related expenses. Loan repayment does not, as it is wealth building. Anyone counting on tax savings should therefore calculate with their personal tax rate and not with a rule of thumb from the brochure.

An example: if €225,000 of a €300,000 purchase price falls on the building, built in 1995, that is 225,000 × 2% = €4,500 depreciation a year. How the split between land and building comes about and which special rules apply is covered in the AfA guide 2026. The tax assessment in an individual case is a matter for tax advice.

Sources

• § 566 and § 566a BGB (German Civil Code), a sale does not end a tenancy, rent security
• § 573, § 573c, § 574 and § 577a BGB; Berlin Termination Protection Clause Ordinance of 13 June 2023 (GVBl. p. 228), valid until 30 September 2033
• § 556d BGB with the Berlin Rent Limitation Ordinance, valid until 31 December 2029
• § 558 paras. 1 and 3 BGB; Berlin Senate on the Increase Limit Ordinance, 15 per cent in three years until 2028
• § 7 para. 4 Einkommensteuergesetz (German Income Tax Act), straight-line depreciation of buildings
• Price-to-rent multipliers: BBI analysis Price-to-rent multiplier Berlin based on the IBB housing market report 2025 and transaction data from the Berlin valuation committee