Renting out an apartment: nine steps to the right tenant

Kevin Celentano · 2026-10-13

The purchase agreement has been signed, and you have the keys. Or your long-term tenant has given notice, and the apartment will be empty in three months. In both cases, the same question arises. What needs to be done now and in what order?

Many owners start with the advertisement. This is understandable, but it is actually the third step. Before that, you must decide on the rent level, which is subject to limits in tenancy law and tax law. After that come tenant selection, the contract, handover, and a notification duty that many landlords are unaware of.

This guide walks you through the entire process. For each step, you will find the deadline, the legal basis, and the link to the detailed guide. At the end, we calculate what two months of vacancy cost after tax.

01The nine steps at a glance

Before we go into the details, here is the entire process on one page. The times are experience values for a normal new letting in a city with sufficient demand.

Steps 2 and 6 account for most of the money. Step 8 carries the most risk of fines, as the duty is hardly known.

02Before you advertise: Setting the rent

You can freely set the rent for a new letting, subject to two limits. The first comes from tenancy law, the second from tax law.

The tenancy law limit. The benchmark is the local reference rent, i.e., what has been agreed for comparable apartments in the last six years. You can find this in your municipality's rent index, if there is one. If the apartment is in an area with rent control, the new rent may not exceed the reference rent by more than 10% (§ 556d BGB). Since the 2025 reform, states are allowed to designate such areas until the end of 2029.

There are exceptions. Apartments that were first used and rented out after 01.10.2014 are not subject to the rent control (§ 556f BGB), nor is the first letting after comprehensive modernisation. If the previous tenant's rent was higher, you may charge this amount again (§ 556e BGB). Anyone invoking an exception must inform the tenant of this unsolicited before the contract is signed (§ 556g (1a) BGB). How to substantiate the reference rent is explained in the guide on local reference rent.

The tax limit. This applies primarily if you are renting to relatives or acquaintances. If the rent is less than 50% of the local market rent, the tax office splits the letting into a paid and an unpaid part. Your income-related expenses will then only be recognised proportionately. Above 66%, the letting is considered fully paid (§ 21 (2) EStG). In between, the tax office checks whether you intend to generate a surplus in the long term.

In addition to the cold rent, there is the advance payment for operating costs. It should be appropriate, i.e., correspond roughly to the expected costs. Which costs you are allowed to pass on is regulated by the Operating Costs Ordinance; the overview is in the guide on apportionable utility costs.

03Energy certificate, advertisement and viewing

You need a valid energy certificate for every new letting. It is valid for ten years. If the apartment is part of an owners' association, it is usually kept by the property management.

Since 29.07.2026, the rules have been in the Building Modernisation Act (GModG), the previous Building Energy Act was renamed. The content remains the same. The advertisement must state the certificate's key figures (§ 87 GModG), you must present it unsolicited at the viewing, and provide a copy after the contract is signed (§ 80 GModG). Violations can cost up to €10,000 (§ 108 GModG). Details and costs of the certificate are explained in the guide on the energy certificate for landlords.

If you commission an agent, you pay them yourself. Since 2015, an agent may not demand money from the tenant if the landlord has commissioned them (§ 2 (1a) Housing Mediation Act). The costs are income-related expenses for you.

04Selecting a tenant: the most effective protection against default

Selecting a tenant is the step where you have the least influence later on. Once the contract is signed, you can only get out of an indefinite tenancy agreement with a legal reason.

What you are allowed to ask depends on the timing. At the viewing, name and contact details are sufficient. Only when someone seriously applies are questions about income and profession permitted, and salary certificates or a credit report only shortly before the contract is signed. Questions about origin, religion or family planning are taboo. A table with all permitted questions and deletion deadlines can be found in the guide on tenant selection and credit checks.

As a rough guide, the warm rent should be at most about one-third of the household's net income. This is not a legal rule, but a common benchmark that many landlords and property managers use.

05Tenancy agreement, deposit and handover

Three documents decide whether you are well-positioned in the event of a dispute: the tenancy agreement, the deposit agreement, and the handover protocol.

Care is worth more than creativity when it comes to the contract. Self-formulated special clauses are the most frequent cause of disputes because the law strictly scrutinises standard form contracts. An invalid pet ban or rigid renovation clause becomes ineffective in an emergency. You can find a checked template under Tenancy agreement template.

The tenant may pay the deposit in three monthly instalments, the first at the start of the tenancy. Higher security, even in the form of additional guarantees, is ineffective if it exceeds three net cold rents.

06After moving in: Notification duty, utility costs, tax

With the handover of the keys, three duties begin that recur regularly or are bound to a deadline.

Landlord's confirmation. Your tenant must register with the residents' registration office within two weeks of moving in (§ 17 BMG). For this, they need your written confirmation of the move-in, within the same deadline (§ 19 BMG). It contains your name and address, the move-in date, the address of the apartment, and the names of the people moving in. Anyone who does not issue the confirmation or does not do so in time risks a fine of up to €1,000 (§ 54 BMG). Anyone who confirms a move-in that does not take place risks up to €50,000.

Operating cost statement. You settle the advance payments once a year. The statement must reach the tenant no later than twelve months after the end of the accounting period, otherwise you lose the right to demand arrears (§ 556 (3) BGB). How to proceed is shown in the guide on operating cost statement.

Tax. You enter rental income and costs in Annex V of your income tax return. You may deduct, among other things, mortgage interest, building depreciation, non-apportionable house money shares, repairs and agent costs for letting. What is taxable at the end is calculated by the guide Taxing rental income.

rental income What remains of your rent after tax? Calculate your own apartment with your income.

07Example calculation: what two months of vacancy cost

How much time should the search for the right tenant cost? The question can be answered by calculating the first year of letting.

Julia Berger is single and has a taxable income of €60,000 a year. She bought a 60 m² existing apartment and wants to rent it out for €11 per m² cold, i.e., €660 a month. The names are fictitious, the figures are a calculation example and not a forecast.

We compare two cases. In Case A, the tenant moves in directly on the first of the month. In Case B, the apartment is empty for two months. During this time, Julia also bears the operating costs herself, assumed at €200 a month.

The two empty months cost Julia €1,720 before tax. After tax, it is €1,091, because the higher loss reduces her income tax by a further €629. One month of vacancy therefore costs her around €545 net, almost one month's cold rent.

The calculation also shows something else, and you should know that before buying. With this financing, the apartment does not pay for itself in the first year. Even in the best case, Julia contributes around €230 a month, after tax. Part of this is repayment, i.e., asset accumulation. Nevertheless, the contribution must permanently fit into her budget.

Does this mean you should take the first applicant? No. A tenant who does not pay costs many times more. In the guide on eviction proceedings, we calculate ten months of rent default plus legal costs. Compared to one month of vacancy of around €545 net, thorough selection is almost always the better deal. Good preparation shortens the search: if you have the energy certificate, documents, and contract ready before the advertisement, you don't lose weeks.

08Letting yourself or commissioning a management service

You can do all nine steps yourself. Many owners do this for one or two apartments nearby. It becomes more difficult if the apartment is far away.

There are two management services in an owners' association. The WEG property management takes care of the common property and is paid via the house money. The rental management, also known as special property management, takes care of your tenancy: rent receipt, reminders, utility billing, tenant change. You commission them separately, and you are not allowed to pass their costs on to the tenant. Tax-wise, they are income-related expenses. What a management service performs and costs is explained in the guide Property management for buy-to-let investors.

09Risks and typical mistakes

Most expensive mistakes do not happen when selecting a tenant, but with formalities. We see these seven most frequently.

1. Rent above the rent control. If the tenant objects to the violation within 30 months of the start of the tenancy, they can demand back the excess rent paid retrospectively from the beginning (§ 556g (2) BGB). Without the prescribed information, you cannot rely on an exception (§ 556g (1a) BGB).
2. Rent too low for relatives. Below 66% of market rent, income-related expenses are at risk of being cut.
3. No energy certificate at the viewing. Fine up to €10,000.
4. Self-made contract clauses. Invalid standard clauses are deleted, the legal rule applies.
5. Deposit in your own account. It must be invested separately; otherwise, the landlord is liable in case of loss.
6. No handover protocol at move-in. At move-out, there is no evidence of what damage is new.
7. Landlord's confirmation forgotten. Fine up to €1,000.

An economic risk remains that no contract excludes. Tenants can become insolvent, apartments stand empty between two tenants, and repairs occur that you cannot pass on. Plan for a reserve that covers at least a few months' rent. Which insurances catch a part is shown in the guide on insurances for landlords.

10Further reading

• Tenant selection and credit check: what landlords may ask
• Tenancy agreement clauses: what is effective and what is not
• Apartment handover protocol: how to protect yourself as a landlord
• Taxing rental income
• Rights and duties as a landlord
• Furnished letting: Surcharge, rules and tax

11Sources

All sources accessed on 13.10.2026.

• §§ 535, 549, 551, 556, 556d–556g BGB, gesetze-im-internet.de
• § 21 (2) and § 32a EStG, gesetze-im-internet.de
• §§ 17, 19, 54 Federal Registration Act (BMG), gesetze-im-internet.de
• § 2 (1a) Housing Mediation Act, gesetze-im-internet.de
• §§ 80, 87, 108 Building Modernisation Act (until July 2026 Building Energy Act), gesetze-im-internet.de
• Act to Extend the Rent Control of 17.07.2025, BGBl. 2025 I No. 163

Note: This guide does not replace tax or legal advice. All figures are calculation examples with disclosed assumptions, as of 13.10.2026.