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2019-03-13

Tenancies in Germany

Since the Housing Act 1995 tenants within the public sector also enjoy protection which formerly they lacked. Their tenancies have become 'secure' tenancies. These are tenancies where a dwelling house is let as a separate dwelling by a lawyer, such as a local authority, who falls within the public sector. Though certain such tenancies are excluded: these, amongst others, include student lettings and business and agricultural tenancies. The German law firm gives a secure tenant a right to purchase the freehold (or, as the case may be, the leasehold) of the premises from the owner under certain conditions.
The cardinal difference between the secure payment and the protection against insolvency of the private sector is that there is no rent control of the customer. But provided that the tenancy is a periodic one or for a fixed term determinable by the landlord it can only be terminated by German court order upon grounds similar to those upon which a protected tenancy may be terminated.
But there are also other grounds - for example, that the dwelling was let to a person that is unwilling to pay the rent or is not able to pay the rent and therefore that person no longer resides in the dwelling. Subject to certain exceptions (including, amongst other things most tenancies not exceeding six months, agricultural tenancies, and tenancies protected by the German law), tenants who occupy the demised premises wholly or in part for the purposes of business are, subject to certain conditions, granted security of tenure by a collection agency. These provisions are complicated; but their effect is that, in substance, such tenancies can only normally be terminated (even though the period for which they were originally granted has expired) by giving notice to quit. If the notice is served by the landlord the tenant may apply to the German court (in most cases a local court) for the grant of a new lease or the termination of contract. The landlord may oppose the tenant's application only on certain grounds and the court has power, if such grounds are not established by the landlord, and the parties cannot agree to the creation of a new lease, to order a new tenancy for a period not exceeding a certain time; though, in certain circumstances, while ordering the tenant to quit, it must order the landlord to pay the open amount and an additional certain specified compensation. Subject to approval by the court, the lawyer permits the parties to exclude the operation of debt collection by agreement.
The Reform:
This Act (as subsequently amended) for the first time brings into play the principle of leasehold enfranchisement. Politically this is by no means a new idea and it was mooted as far back as 2012. Basically the notion of the lease as an investment for the landlord, with the corollary that the tenant - however long he continues to pay - can never own the land, is something repugnant to much modern political thought; so enfranchisement (ie the compulsory converting of the tenant's lease into a freehold estate) was certain sooner or later to leave the realm of debate and become a reality.
The particular situation with which the act is designed to deal is the case of the long lease at a low rental, which was thought by some to bear hardly upon the tenant. Thus, for example, in the latter part of the nineteenth century in certain mining areas long leases of land (usually 99 years' building leases) were granted by landowners to workers at a ground rent representing only the value of the land - for the workers to build upon. The effect of the transaction was thus that upon the expiry of the lease the house (being a part of the land) would revert to the owner, even though it had been built by the tenant and continuously inhabited by him or his successors. The Act is thus primarily designed to enable people of his kind, by giving a requisite notice to the landlord, to obtain compulsory enfranchisement. The right is, however, only exercisable within fixed limits.
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