Introduction

If you have an empty property currently not in use, you may have considered renting out or turning it into a holiday home. Renting a holiday home is a good idea for two main reasons:

➡️ it won't sit around being empty and useless;

➡️ it will bring you extra income.

In this article I want to give you a thorough overview of what you need to look out for when embarking on such a project.

Some General German Laws on Renting Out Properties

The first important thing to clarify is: are you the owner of the property, or do you want to rent out someone else’s? As the 📖 German Civil Code (BGB), in its section 540, states that you can only rent out a property with the permission of the owner.

If you do rent out someone else's flat with a one-off licence, the owner is obliged to warn you. In case you fail to do so, they can terminate the contract with you before it expires.

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Rental Rules in German Cities

Another strict restriction is that in many German cities (e.g. Berlin, Hamburg, Munich) it is illegal to rent out an apartment on a rental platform such as Airbnb. They also prohibit temporary private rentals and are though on these kinds of abuses.

But provided that you want to rent out a room or an apartment that is only 50% of a total living space, you can do so without being subject to the rules above. ☝️

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Ask Your Questions!

You can go to a lawyer, or a tourist information office can also answer your questions. At the latter, you may find people interested in your property too, because many areas and municipalities centrally collect landlords, then pass on their offers to guests.

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What is the Difference Between Private and Commercial Rentals?

If you own an empty room, an entire apartment or a house, there is essentially no obstacle to rent out your property. But first, ask yourself the following questions.

❓ Do you want to rent out privately or commercially?

❓ Who is your target audience?

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How Do You Distinguish Between the Two?

Your answers make quite a difference, but in all cases, you will need a rental contract.

If your rental income will exceed €24,500 a year from renting your property out, you are obliged to register it as a business, therefore pay business tax on it. In addition, if you

• intend to rent out your property as an investment
• and/or you want to have employees,

then you should register the property as a business. Be sure to check in advance whether you need to register the property as a commercial business or not. ☝️

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Renting Out Your Property as a Private Business

☝️  It is important to take into account local laws and regulations.

☝️  It will affect your income tax.

☝️  You can claim up to three times the rent as a deposit.

☝️  You are not obliged to make an insurance; however, I recommend you to at least make an insurance for the building itself, or a liability insurance.

☝️  If you seek professional advice, find a lawyer specialized in tenancy or property law.

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Renting Out Your Property as a Commercial Rental

☝️  You will need to check with the local building authority that your property meets all the criteria for renting.

☝️  This will also affect your income tax, and you will also have to pay additional taxes on top of it.

☝️  There is no upper limit to how much you can claim as a deposit.

It’s important to seek expert advice before starting a business like this, as no one is immune from being prosecuted. Moreover, you will be more profitable if you can make the most of your property.

Requirements for Renting Out a Holiday Home

In Germany, the 📖 Housing Protection Act regulates whether you can rent out your property and, if so, what it must be like. It needs to meet all the criteria.

What are these requirements?

For example, if your property is close to a tourist destination (spa, thermal bath, beach, etc.), you are more likely to get a licence to rent it out. Nearby shops, public transport hubs, attractions and parking close to the property are additional advantages.

In addition, the apartment should have all the equipment that the guest may need, such as:

➡️ furniture,

➡️ bed linen,

➡️ towels,

➡️ kitchen appliances,

➡️ bathroom furnishings.

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Renting Out Your Property Through a Travel Agency or Independently?

Once your property’s equipped, you have the green light from all the authorities and have been granted permission for renting out your property, you still have to decide how to advertise it - and whether you'll do it yourself or hire an agency to do it for you.

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Self-marketing

Regardless of the quality of your property, and the quantity of attractions close to it, it’s could be still difficult and time-consuming to find guests. It's not enough just to keep the property tidy and organized, you need to take marketing into account too.

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Marketing Through an Agency

Under German law, you'll get a subsidy if you list your holiday home within the local tourist office - you can earn some extra income while making sure that your property rental prospects are passed on to guests. ☝️

You can also hire a real estate agency to advertise your holiday home, which bears some extra cost, although it’s a worthwhile investment as your holiday home is more likely to be rented out all year round this way. The pros and cons of marketing through an agency:

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Pros:

✅ Subsidy,

✅ Rental prospects,

✅ Professional advertising,

Cons:

❌ Extra costs,

❌ Less creative freedom.

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Renting Out Independently: Keep These in Mind

In this case, all the work falls to you, but you also have more freedom to design everything as you see fit.

Always start with thorough planning before you start. Think carefully about what you want - that's the basis of successful business plans. Answering the following questions is a good starting point.

❓  What is your specific vision?

❓  Which target and age group do you want to attract?

❓  Approximately how much would it cost to implement your idea?

❓  How much do you want to charge your guests?

❓  How will you implement your goals?

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Target and Age Group ☝️

Think about the kind of people you want to accommodate: travellers, couples, families, seniors, students, etc., but the size and location of the property also needs to be taken into account.

For example, the big cities (Berlin, Hamburg, Cologne, etc.) tend to attract young people, who generally go on holidays for shorter periods and have different needs in the terms of equipment and facilities.

The more you know who your target audience is, the easier it will be to achieve greater success more quickly.

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Furnishing and Equipment ☝️

In terms of equipment, other than the obvious items like:

➡️ bed,

➡️ fridge,

➡️ shower,

➡️ stove,

➡️ heater;

➡️ linen,

➡️ towels,

➡️ soap,

➡️ hair dryer,

➡️ cutlery etc.

are also basic requirements. Don't forget about things like a stable internet connection and Wi-Fi, these are now essential.

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Set Your Prices ☝️

You can ask a lawyer or your local tourist information centre for advice. Or you can find out for yourself what your competitors are offering by checking:

• Airbnb,
• Booking.com,
• FeWodirekt,
• or Expedia for holiday homes similar to yours.

It’s crucial to find the right balance: don’t set the price too high, because then no one will rent it, but don’t set it too low either, because that might make guests suspicious, insecure and it also won’t be very profitable for you.

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Advertising ☝️

An online presence is inevitable, and you need to know the options available to you in the digital space. These opportunities are simple and involve relatively little bureaucratic tasks.

• Booking management: booking platforms have their own booking systems, marketing tools and skilled content creators, who produce glamorous pictures and magical descriptions of your property.
• Your own website: this way bookings come directly to you, without you having to pay a commission to anyone. The layout, user interface and design of your site can help convince more people to choose your holiday home

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The Importance of Descriptions and Photos ☝️

It's important to stand out from the crowd. Well-written descriptions and high-quality photos can help you do this.

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Bookings ☝️

It's a good idea to include an automatic booking system on your website and also an online payment function.

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Final Touches ☝️

Some people like to hand over their holiday home to the guests in person, others call them when they arrive, and others send them an email or leave a letter in the property for them.

Conclusion

Once your holiday home is ready, ensure all equipment is functioning, the property is clean, and you're accessible to guests. Even with a booking agency, be prepared to address any issues directly.

Positive guest experiences contribute to a good reputation. This article provides valuable insights, but seek legal advice for a comprehensive understanding.

Frequently Asked Questions

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❓ What are the legal considerations for renting out a property in Germany?

Before renting out a property, ensure compliance with the German Civil Code, which requires permission from the owner. Additionally, be aware of specific rental rules in German cities like Berlin, Hamburg, and Munich.

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❓ What distinguishes private and commercial rentals in Germany?

Private rentals involve fewer bureaucratic tasks, but commercial rentals require registration and may have tax implications. If rental income exceeds €24,500 annually, registration as a business is mandatory.

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❓ How can property owners avoid legal issues when renting out their holiday home?

Property owners must adhere to the Housing Protection Act in Germany, meeting criteria such as proximity to tourist destinations, proper equipment, and compliance with local regulations.

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❓ What are the considerations for marketing a vacation rental independently?

Independent marketing requires strategic planning, understanding the target audience, furnishing and pricing considerations, online presence, and effective advertising to attract potential guests.

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❓ What booking management options are available for property owners in Germany?

Property owners can choose between using booking platforms with their systems or creating their own website. Each option has its advantages, such as direct bookings or commission-free transactions, and involves digital marketing strategies.