A residential building in Germany consists of owners with different apartments under one legal entity called ‘apartment building’ (Mietshaus). The German law stipulates that maintenance of the building has to be handled by a professional property management company to safeguard appropriate maintenance and administration in the long term.
The most important issue in managing a residential building is the property management company which takes all measures necessary to professionally and sustainably look after the building, budget management, administration, maintenance etc.). For this purpose an annual owners’ meeting is being held where the property management will present a detailed report for the current year and discuss it with the owners, who will jointly take future decisions concerning the building.
The property management company is responsible for running the property and taking the necessary measures to ensure the proper functioning of the building, on a daily basis. However, it is not necessarily responsible for optimization and appreciation value of the investment, such as replacing a tenant rapidly, renovation of the property in between, and controlled raise of the rental fees. The fact that local and foreign investors have entered the real estate market in Berlin in recent years and the significant increase of apartment buildings have created the need for a more effective connection between the owners and the property management and the need for active involvement in appreciation of value by rent management. Rent management includes management of a single apartment unit and the representation of its owners, while effectively managing the tenant on behalf of the owner, optimization of the investment respectively replacement of tenants, raise of rental fees on a regular basis and representing the owners during annual meetings.
Raise of rental fees
One of the main components that is crucial for the property value is the rent paid by the tenant, which determines the yield for the investor. Therefore, consistent and professional control concerning the increase of the rent is a crucial factor for appreciation value.
Existing rental agreement
Germany has a unique calculation system for urban rental tariffs, called ‘Mietspiegel, based on dozens of variables such as: year of construction, quality of construction, facilities and level of finish in general, neighborhood, exact location, and more. The ‘Mietspiegel’ includes a controlled mechanism to raise rental fees that allows an average increase of up to 15% within a period of 3 years. However, raising rental fees in Germany is a procedural and official process requiring a thorough inspection of the property by an expert. This procedure is taking place once in 3 years and is part of the rent management. It is a mean to appreciate the value of the property at any given time.
New rental agreement
When signing a new rental agreement, the owner is not obligated to follow the urban ‘Mietspiegel’ and has the right to apply the market price that is determined by the demand of the ‘rental’ market. In 2013, rental fees for a new lease in Berlin’s popular neighborhoods have reached a level twice as high as the ‘Mietspiegel’.
Change of tenants
In 7 – 10% of the rented apartments in Berlin tenants are changing yearly. A new tenant is an excellent opportunity to appreciate the property’s value by refurbishing the apartment and charging a higher rent in line with the market prices. The property management will provide the information regarding the adequate market price based on location and level of the apartment facilities. Thus, the owner will be able to optimize his investment and enjoy a higher yield in the long term.
Long-term rentals and mid-term rentals (limited period)
Any tenant who has been renting an apartment in Berlin, holding a standard rental agreement for long-term and has been living in the apartment over a year has the right to stay in the apartment for an unlimited period provided that he has been paying his rent regularly. This is the most common situation in Berlin. However, the increasing number of students and immigrants moving to Berlin created the need for furnished apartments for a rental period between 3 months and one year, where the release date will be set in advance. The rental tariff for a furnished apartment is higher than a long-term rental. This type of rental agreement is not a binding contract and a release date is set in advance. Another protruding advantage, of course, is that the rent will be adjusted to the market price with each new agreement, i.e. every year the rent will be adjusted to the prices of the local rental market. Beyond that, when selling the property an empty apartment will always be higher in value than the same apartment bound to a long-term rental agreement. More about mid-and short-term rentals in Berlin
Rent management allows the investor to maximize his profit as from purchase of the property to its realization. Appreciation value is influenced first of all by local and urban value increase, condition of the apartment and the level of rental fees. A quality rent management is providing the owner continuously with all necessary advice and information and is crucial to achieve maximum optimization of the investment. We strongly support active rent management policy to achieve appreciation value of our clients’ property in Berlin.
Transparency of information
Rent management services, which we provide to our loyal customers reflect our concept: we spare no effort to maximize our clients’ investment in the city. For this purpose, we use an online rent collecting system with full transparency to our clients also showing transfer of the rent to their bank account. This activity is carried out by Internet interface available to our clients who can access it using a personal password. To the service