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Sale Of Commercial Real Property In Germany

Rental of commercial real property in Germany

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The rental of commercial premises is governed by the special provisions of the German Civil Code (Bürgerliches Gesetzbuch, BGB). German laws are more on the part of the lessee than, for example, British laws, but less than French laws.

Lease and rental index

Usually, the rent is paid for a month ahead, while the parties have the right to agree on its terms. Commercial facilities are usually surrendered for 5 to 10 years with the possibility of extending the contract. Longer periods (15-20 years) are typical of supermarkets. The maximum lease is 30 years.

The lessee must declare the early termination of the contract in advance, usually between 6 and 9 months before its termination. The conditions for the early termination of the contract shall be specified by the parties by mutual consent. For long periods, the lessee will normally be entitled to terminate the contract from the fifth year.

In the commercial real estate market, the contract often includes an automatic indexation of rents. This is permitted only if the contract is concluded for a minimum of 10 years. Rent value is usually linked to the German consumer price index (CPI). Indication occurs every year or when the CPI rises or decreases (usually 10 per cent).

The lessee has the right to rent the premises only with the consent of the owner. If the lessor refuses to grant permission without a valid reason, the lessee may terminate the contract early.

Maintenance costs: utilities and taxes

The contract contains questions relating to the costs of the facility. The lessee pays the landlord a fee for water, cleaning, heating and garbage disposal. The tenants pay directly for electricity. Most often the lessor is responsible for major repairs and the lessee is cosmetic. Sometimes the service fee includes insurance and Real property taxwhich is paid annually at 1 to 2 per cent of the estimated cost. In addition, VAT is charged with rent in commercial areas (19 per cent). Almost all tenant organizations (except doctors ' offices and banks) may refund the tax.

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