Renting and letting in Germany – current market situation

Our property management company, BLP Management GmbH, manages almost 1,000 units in Germany – and the trend is rising. We have been able to recruit three new employees in 2022 and are building intensively on the digitalization of processes and procedures.

There is a very high demand for good property managers. Especially in Germany’s metropolises such as Berlin and Leipzig, we have the impression that the demand is rising and rising. More and more property managers are giving up for reasons of age or realize at the end of the year: it doesn’t pay off.

In recent years, many things have “stuck” with property managers that did not exist before. Starting with the very dynamic tenancy law, the fiasco of the rent cap, furnished renting, the new property tax returns in 2022 or even just the change in the statutory VAT in the meantime, caused a lot of additional working hours. Added to this are the refurbishments and energy modernizations in existing buildings, the new condo law, the increased qualification requirements, and various liability issues. Operating costs will also be calculated differently in 2023, as the legislator has redefined the energy values and landlords will also have to pay parts of the heating costs depending on the energy class.

Conclusion: It has never been so important to have a good property administrator and manager as it is today.

Why are you interested in this as a tenant and landlord? Because you should put attention to who manages your flat or house. Not only now, but also in the future, it is elementarily important to have competence here. Because there are many changes that tenants and landlords must adjust to. Just another keyword: energy prices and solutions for tenants and landlords.

The most important things for you as a landlord now are securing the cashflow, with rising side costs, rising costs for mortgages (interest rate increases) and rising costs for renovations and modernizations.

In the future, you can and will only be able to pass on part of these costs to the tenants, but you must offer a contemporary and affordable flat to protect your investment. Part of this right now, regardless of whether you are renting out a condominium or an apartment building, is limiting the increases of side costs. If you want to rent out residential real estate in 2023 and beyond, you need a clear plan for your tenants, because only those tenants can pay net cold rent in line with the market who do not have high side costs.

This is comparable to buying a used car. If you buy an old car in poor condition, you have high maintenance costs. Whoever buys a new one has a guarantee and low maintenance costs. Now it is up to the property owners to turn their old assets into new ones by investing massively in the existing stock. This is exactly why new construction will be in such big demand. But refurbishing the existing stock is still much cheaper than buying new builds. For most scenarios, at least.

Contact an expert and have a professional renovation roadmap made for you.

For tenants today, it means taking a very close look at the rental contract.

  • How much is the warm rent?
  •  What is the energy value of my flat?
  •  What can I do to reduce the service charges?
  •  How can I find another flat?
  •  Do I want to live in this flat for longer?
  •  Is it worth moving to another city, can I possibly buy a property there?
  •  What happens if I pay very little rent? Can the landlord renovate the flat in return? What happens if he can’t?

These are all issues that need not only to be discussed, but also to be addressed and acted upon. Because only together with tenants and landlords can we create fair dealings with each other. I think that’s what we’re here for as managers.

If you have specific questions about the current topic, then take part in the 38th Berlin Real Estate Talk with Ioannis Tzakris, Managing Director of BLP Management GmbH and Achim Amann, Managing Director of Black Label Properties. On 15 November, 7:00 p.m., you can ask your questions live via Zoom and receive immediate answers from the experts.

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