Letting a Flat: Process, Obligations and What Matters

The Letting Process: Six Steps at a Glance

A well-considered letting follows a clear sequence. Each step builds on the previous one – working diligently here avoids the most common mistakes:

1. Determine a market-appropriate rent: Before you advertise, establish what the flat is worth on the market – and what is legally permissible.
2. Prepare the listing and market the flat: A complete, honest listing with good photographs and all mandatory information attracts the right prospective tenants.
3. Conduct viewings: Well-structured appointments and prepared documents save time and create a professional impression.
4. Select the tenant: A self-disclosure form, proof of income and a credit check help you make the right decision on objective criteria.
5. Conclude the tenancy agreement: A legally sound agreement records everything essential and protects both parties.
6. Hand over the flat: A joint handover protocol with meter readings and keys documents the condition at the start of the tenancy.

In the following sections we work through each of these steps and identify the legal obligations to be observed along the way.

Step 1: Determining a Market-Appropriate Rent – and Observing the Rent Cap

The level of rent is the single most important lever of a successful letting. Set it too high and the flat stays empty; set it too low and you forgo income for years. Guidance is provided by the local comparative rent (ortsübliche Vergleichsmiete): what is customarily paid for flats of comparable type, size, fit-out, condition and location. An important source for this is the local rent index (Mietspiegel); comparable offerings in the same area provide further help.

In Düsseldorf a mandatory limit applies on top of this: the rent cap (Mietpreisbremse, §§ 556d ff. of the German Civil Code, BGB). Under the Tenant Protection Ordinance of North Rhine-Westphalia (Mieterschutzverordnung NRW), Düsseldorf is designated as an area with a strained housing market. There, on re-letting, the rent at the start of the tenancy may exceed the local comparative rent by no more than ten per cent. The provision has been extended by statute until 31 December 2029. A cleanly derived and documented starting rent is therefore not only commercially sensible but legally required.

The Rent Cap: Exceptions, Disclosure and Düsseldorf

The ten-per-cent limit does not apply without exception. The following cases are particularly important for owners:

• New build: Flats first used and let after 1 October 2014 are exempt from the rent cap.
• Comprehensive modernisation: Where a flat is let again for the first time following a comprehensive modernisation, the cap does not apply to that first letting.
• Previous rent: If the rent validly agreed beforehand was already above the permissible limit, that previous rent may continue to be charged – the starting point is then not the ten-per-cent limit.

On request, the landlord must also disclose to the tenant the facts on which a permissible higher rent is based (for example an exception). Alongside the rent cap, a reduced capping limit (Kappungsgrenze) applies in the NRW municipalities covered – and thus in Düsseldorf too: in existing tenancies the rent may rise by no more than 15 per cent within three years (instead of 20 per cent) and may not exceed the local comparative rent. Calculating correctly from the outset avoids subsequent reclaims.

Steps 2 and 3: The Listing, the Energy Performance Certificate and the Viewing

A good listing is honest and complete. It states the rent and service charges, the floor area, the number of rooms, the location, the fit-out, the deposit and the start of the tenancy – complemented by meaningful photographs. Completeness attracts the right prospective tenants and filters out unrealistic enquiries early on.

A statutory obligation already applies during marketing: the energy performance certificate (Energieausweis). Under the Buildings Energy Act (Gebäudeenergiegesetz, GEG), when letting, the key energy figures must already be stated in a property advertisement – the type of certificate, the final energy demand or consumption, the principal energy source, the year of construction and the energy efficiency class. At the viewing at the latest, the energy performance certificate or a copy must be presented unprompted, and it must be handed over after the agreement is concluded. Anyone who lets without a valid energy performance certificate, or who omits the mandatory information, risks a fine. The viewing itself should be set up in a structured way: fixed appointments, prepared documents and a transparent process leave a professional impression and make it easier to compare applicants later.

Step 4: Selecting the Tenant – Self-Disclosure, Creditworthiness and SCHUFA

The choice of tenant is decisive for the quality of the tenancy. It is customary and appropriate to gather information by means of a self-disclosure form (Selbstauskunft), supplemented by evidence of economic capacity:

• Proof of income: usually the most recent payslips, or corresponding evidence in the case of the self-employed.
• Credit report: for example a SCHUFA report obtained by the applicant.
• Certificate of freedom from rent arrears: a voluntary confirmation from the previous landlord.

For the self-disclosure form, the standard of necessity applies: questions are permissible if they are relevant to the decision on the agreement (income, occupation, the number of persons moving in, ability to pay). Questions with no bearing on the tenancy are impermissible – for example about religion, family planning, party affiliation or previous convictions that have nothing to do with the tenancy. Make your decision on objective, comprehensible criteria. A careful, fair selection is the best protection against rent defaults.

Step 5: The Tenancy Agreement and the Deposit under Section 551 BGB

The tenancy agreement records what has been agreed and protects both parties. It should clearly name the contracting parties, the rented property, the level of rent, the arrangement for operating costs, the deposit and the start of the tenancy. Invalid clauses do not operate in the landlord's favour but are replaced by the statutory provision – often to the landlord's detriment. Care here pays off directly.

For the deposit, Section 551 of the German Civil Code (BGB) sets clear, mandatory limits:

• Amount: The deposit may not exceed three times the monthly rent excluding operating costs – that is, three months' net cold rent.
• Payment in instalments: The tenant may pay the deposit in three equal monthly instalments; the first instalment is due at the start of the tenancy.
• Separate investment: The landlord must invest the deposit separately from their own assets and protected against insolvency, at the interest rate customary for savings deposits with three months' notice. The interest accrues to the tenant and increases the security.

Any agreement deviating to the tenant's disadvantage is invalid. Anyone who demands more than three months' net cold rent, or who does not invest the deposit separately, risks reclaims.

Step 6: Handover of the Flat, Operating Costs and the Obligations Thereafter

The process concludes with the handover of the flat and a joint handover protocol. Record in it the condition of the rooms, any defects, the recorded meter readings (electricity, gas, water, heating) and the number of keys handed over. Both parties sign – this creates a robust basis for the later move-out and prevents disputes over damage.

From the start of the tenancy, you take on ongoing obligations as the landlord:

• Maintenance of the rented property: The flat must be handed over in, and kept in, a condition fit for contractual use (Section 535 BGB); upkeep and repair are, as a rule, the landlord's responsibility.
• Operating-cost statement: Where advance payments are agreed, an annual statement must be drawn up. Operating costs may only be passed on if this is agreed in the tenancy agreement (Section 556 BGB); which cost types may be passed on is governed by the Operating Costs Ordinance (Betriebskostenverordnung, BetrKV) – for example property tax, water and waste water, heating and hot water, refuse collection, building cleaning, garden maintenance, lighting and the building insurance. Administrative and maintenance costs are not among them.
• Duty to maintain safety: You must avert hazards within your sphere of responsibility – for example safe stairs and paths.
• Landlord's confirmation of residence: Under the Federal Registration Act (Bundesmeldegesetz), you confirm the move-in to the tenant so that they can register their residence.