Real Estate, Germany updates

New legislation on rent increases due to modernisation – impact on investors
  • Germany
  • 10 May 2019

Tenants in Germany are generally well protected against rent increases in existing tenancies and high rent increases are uncommon; however, a major exception is when flats or houses are modernised. New legislation aims to offer tenants improved protection against abusive practices when modernisation work is announced and carried out and prevent them from being disproportionately burdened by rent hikes due to modernisation.

Formal requirements on agreements to amend real estate purchase contracts after conveyance
  • Germany
  • 16 November 2018

Federal Court of Justice case law suggests that the parties to a real estate purchase contract can in principle immediately change its content without having to comply with notarial form requirements after the notarial certification of the real estate purchase contract containing the conveyance has been concluded. The court's recent decision in this regard is to be welcomed in the interests of the continuity of its case law and in view of the lower courts' increasingly inconsistent case law in the past.

New RETT rules for share deals
  • Germany
  • 06 July 2018

The Ministers of Finance of the Federal States recently agreed on new real estate transfer tax (RETT) rules for share deals. According to official press releases, a fundamental RETT reform that had been previously discussed was not agreed. Rather, the agreement consists of new RETT rules regarding share deals with a lower threshold, longer holding periods and aligning the rules that are applicable to corporations with those that already apply to partnerships.

Sale of real estate by special purpose vehicles
  • Germany
  • 20 April 2018

Transaction structures involving special purpose vehicles, whose main assets after completion of the purchase process consist only of the purchased real estate, are often chosen in Germany. Such structures are used in particular to shield from liability, so that third-party access to the special purpose vehicle's assets is limited. They are also used to facilitate a sale without incurring real property transfer tax for the exit.

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