Rising costs, regulatory requirements, and necessary renovations present new challenges for private landlords in Berlin. While demand for rental housing remains high, some owners are wondering whether their property still generates the desired return on investment. When is it worth continuing to rent an apartment, and when could a sale be the economically better decision?
Anyone who owns and rents an apartment in Berlin can generally look forward to a persistently high demand for housing. But a reliably rented apartment is not automatically a profitable investment. What matters is what remains of the rental income after deducting all costs and what financial obligations the owner will have in the coming years.
Especially in older buildings, rising administrative costs, necessary maintenance measures, and potential special charges can significantly impact yields. In addition, there are regulatory regulations that limit the margin for rent increases. For apartment owners, it may therefore be advisable to regularly review the profitability of their property and also take into account the current market value.
Why renting in Berlin has become more demanding
The Berlin rental housing market has been characterized by high demand for years. For landlords, this means a comparatively low risk of prolonged vacancies, but at the same time, the opportunities to offset rising costs through higher rents are limited.
The rent cap was extended in Berlin until the end of 2029. When renting out the property again, the new rent may in principle not exceed the local market rent by more than ten percent, unless a statutory exception applies. Legal limits also apply to rent increases in existing rental agreements.
Therefore, while rental income cannot be adjusted arbitrarily, expenses do develop regardless of this. Administrative costs, repairs, and maintenance measures must be financed from the ongoing income or from own resources. Not all costs can be passed on to the tenants.
In addition, there is the condition of many Berlin apartment buildings. Especially in older apartment buildings, investments in roofs, facades, heating systems or other building components are planned for the coming years. Such measures may be necessary to maintain the value of the property in the long term. However, for the individual apartment owners, they initially mean additional financial burdens.
What remains of the rental income in reality?
Many property owners base their assessment of their investment on the monthly rent. However, this alone tells little about the actual profitability of the rental. What is crucial are the revenues after deducting the costs that the owner has to bear himself.
A simplified example shows how ongoing expenses can affect the profit.
With a monthly cold-rent of 900 euros, the owner initially earns 10,800 euros per year. After deducting the estimated expenses, 8,200 euros remain. Financing costs, taxes, and possible rental losses are not yet included in this calculation.
If the apartment has a market value of, for example, 300,000 euros today, this annual payment surplus corresponds to a simplified yield of around 10%. 2.73 percent before financing and taxes.
This number alone does not yet determine whether the rental is attractive. A potential increase in the property’s value, favorable financing conditions, or tax considerations can all change the outcome. Nevertheless, the calculation makes it clear why owners should not only look at the amount of their rental income.
Note: The figures are fictitious. The contribution to the maintenance reserve is here considered to be a liquidity outflow, but it is not to be equated with an immediately tax-deductible expense. The additional maintenance costs charged must not double as expenses.
What role does the Berlin rental price index play?
The Berlin rental price index is an important tool for landlords to assess the local average rental price of their apartment. This takes into account, among other things, the size, age, equipment and location of the property.
Especially in the case of long-term rental agreements, the rent actually agreed upon can differ significantly from the amounts demanded in the market for a new rental today. However, whether and to what extent an adjustment is legally possible must be examined on a case-by-case basis.
Therefore, for the economic assessment of a rented property, it is not only crucial to determine what rent would theoretically be achievable; what is also decisive are the actual revenues and the legally permissible development possibilities.
Especially in the case of apartments whose market value has risen in recent years, an interesting question arises: is the current yield still reasonably aligned with the assets tied up in the property?
When is it worth continuing to rent the apartment?
Despite rising costs, a rented apartment in Berlin can still be an attractive investment. This is especially true if it regularly generates rental income, the financing is favorable, and the homeowners’ association has built up sufficient reserves for necessary maintenance measures.
Those who have already fully paid off their apartment often have more financial leeway than owners who still have to pay high monthly credit installments. A long-term positive value appreciation can also be a reason to keep the property in their possession.
In addition, real estate is not only of interest to many owners from a return-on-investment perspective. An apartment can be part of an old-age savings plan, passed down within the family later on, or serve as long-term asset protection.
Professional property management helps to make the economic and organizational processes transparent. It monitors ongoing management, organizes necessary measures within the scope of its administrative mandate, and provides important information to the owners. This enables financial developments to be identified early and upcoming decisions to be better prepared for.
When could a sale be more economically advantageous?
The situation looks different when an apartment generates only small operating surpluses and at the same time larger investments are planned. For example, if the heating system needs to be renewed or an extensive facade renovation is to be carried out, significant costs can be borne by the condominium.
If the existing preservation reserves are not sufficient, a special levy may be required. For individual apartment owners, this may mean that they have to raise several thousand euros in addition within a short period of time.
Personal changes can also influence a sales decision. Some owners want to take on less responsibility for their capital investment in retirement, while others need the tied up assets for new projects or want to allocate their financial resources differently.
However, it should not be overlooked that selling also involves costs and can have tax implications. In particular, when renting out real estate, it is necessary to check whether a capital gain would be taxable.
The crucial question is therefore not whether renting is still fundamentally sensible, but rather what economic prospects the specific apartment offers. To answer this, the future income, the expected expenses, and the realistically achievable sales revenue must be compared with each other.
Can a rented apartment in Berlin be sold?
A residential property can generally be sold even if it is rented out. The existing lease agreement remains in effect. According to the legal principle „purchase does not break the lease“ under § 566 of the German Civil Code, the buyer assumes the rights and obligations of the previous landlord.
For property owners, this means that they do not have to wait for an apartment to become available before preparing a sale. However, in this case, the offer is primarily aimed at buyers who want to purchase a property as an investment.
The selling price of a rented apartment may therefore be lower than the price of a comparable unfurnished apartment. The exact difference depends on numerous factors. In addition to location and structural condition, the amount of the existing rent, the terms of the contract, and the economic expectations of potential buyers play a role in particular.
Anyone considering a sale should therefore not simply base their calculation on the average price per square meter in their neighborhood. A realistic real estate appraisal must take into account the specific rental situation.
Renting or selling: A decision that must be calculated
Whether an apartment should continue to be rented or sold cannot be answered in a general way. Two comparable condominiums in the same building can be evaluated economically completely differently if they were, for example, rented out under different conditions or their owners have different financing obligations.
For a well-informed decision, it is advisable to first determine the actual annual yield and estimate the projected costs for the coming years. This includes not only ongoing expenses but also planned maintenance measures and any potential special charges.
The next step should be to determine the current market value of the apartment. Only after it is known what the sale proceeds of the property could achieve, taking into account the existing lease agreement, can it be assessed whether further renting or a sale would appear more economically advantageous.
Black Label Property Management and Black Label Immobilien: Two perspectives on your property
Black Label Property Management supports apartment owners in the professional management of their properties. This also includes making economic developments transparent and providing owners with the information they need for their decisions.
If over time the question arises as to whether an apartment should continue to be rented or sold, an additional consideration from the perspective of the real estate market can be useful.
With Black Label Immobilien, an experienced marketing partner is available who can assess the current market value, take into account the special features of selling rented apartments, and, if desired, take on the marketing.
