How to set the optimum rental price

Many landlords are worried about getting it wrong when setting the rent. In fact, the rules vary greatly from region to region. But if you proceed with a system and a little know-how, finding the optimum rent is not that difficult. We have summarized the most important aspects for you here.

Does the rent freeze affect me at all?

Many landlords are unsure how much rent they are still allowed to charge. This is because the so-called rent cap has made the existing rules even stricter. So far, however, it only applies in around 300 of the more than 11,000 municipalities in Germany. However, it mainly applies in the conurbations and their suburbs, i.e. the densely populated metropolitan areas. So before you rent out your property, you need to find out whether it is located in a municipality with a rent freeze. You can find out on the Internet whether the rent freeze applies in your municipality. If you prefer to play it safe, contact an experienced professional estate agent or the relevant authority directly.

Local comparative rent and rent index

What hardly anyone knows is that the Economic Penalties Act from 1954, which is still in force, stipulates that the standard local rent may not be exceeded by more than 20 percent for new rentals. This threshold has not changed today. So in order not to exceed the limits, you must base your rent on the local comparative rent. Problem: What is the local comparative rent? Put simply, it is the rent that is usually paid for properties with comparable criteria such as type, size, condition, location and furnishings in the municipality. The rent index reveals how high the local comparative rent is. However, there are a few catches: First of all, you need to find out whether there is a rent index for your municipality at all. You can find this out from your municipal or city administration or a real estate expert in the region. Often only larger cities have a rent index. In addition, the local comparative rent is not always the same as the rent that can actually be achieved on the market. The figures may be out of date. Often only larger cities produce a rent index regularly and at short intervals. If no rent index is available, you can also use the market rent as a guide. This is based on the principle of supply and demand.

Who pays your rent?

Assuming you are stretching your legal options to the limit, this is not necessarily the optimal rental price. A high rent considerably extends the time until you have found a tenant. For the months in which the apartment is not rented out, you not only lose the rent, but also have to pay the service charges. If you are unlucky, a tenant will move into your apartment only to look for a cheaper one. You will soon be faced with the problem of having to find a new tenant. This will cost you again in terms of marketing the apartment - you may even have to paint it - not to mention the service charges. It is therefore important to find a realistic market price. As a rule, you can hardly find this out yourself without many years of market knowledge. This is where professional estate agents can help you.

Optimizations

Rent increases are still possible despite the rent freeze if the standard of the apartment is raised. Make sure you check whether your property is affected by milieu protection. This determines the extent to which the standard may be raised. In principle, the following applies: if, for example, a heating system that meets the latest requirements, underfloor heating or high-quality parquet flooring is installed, a proportion can be passed on to the rent. If a modernization has cost at least a third of the value of a comparable new-build apartment, you are even exempt from the rent cap. In any case, it is advisable to find improvements that also benefit the tenant. For example, additional parking spaces for cars can be created or niches in the apartment building can be converted into additional storage space.

To determine the optimum rental price, it helps to seek the advice of an expert. This is because a lot of background knowledge, knowledge of the market and a great deal of experience is required for a correct assessment.

Are you unsure how to determine your optimum rental price? Please contact us! We will be happy to advise you.

Photo: Stadtratte