Real Estate Glossary

Explaining Real Estate Vocabulary


Acquisition Costs

Acquisition costs are all costs incurred in the course of the purchase of a plot of land or a property. These include the brokerage fee, court and notarial fees, survey costs and charges for entry into the Land Register. Acquisition costs can be deducted from tax but only subject to the condition that the property is not personally used by the owner exclusively for residential purposes.

Act on Residential Property Ownership

In Germany, the Act on Residential Property Ownership (Wohnungseigentumsgesetz, WEG) forms the legal basis for residential property ownership. The Act contains, among other things, provisions on the establishment of residential property ownership, commonly owned and individually owned property, property management and the meeting and resolutions of the Homeowners’ Association.

After-Sales Service

Customer support provided after the conclusion of the transaction is referred to as after-sales service or after-sales support (Link to Glossary). Those in the business of marketing real estate often offer their clients a variety of after-sales services. For instance, they may agree to act as contact person for all questions and issues concerning the property, even after the sale. Often, a furnishing service is included. If the property is not intended for personal use, after-sales service can consist in arranging the letting of the property. Meanwhile, if the property is to be put on the market again, this, too can be taken care of.

Annual Accounts

See Statement of Service Charges

Asset Value Procedure

The asset value procedure is one of the three traditional methods of real estate appraisal in Germany. Other procedures are the sales comparison approach (Link to Glossary) and the income value method (Link to Glossary).

The asset value procedure is used for condominiums or properties that do not provide any rental income.

The asset value to be calculated is derived from two values, which are assessed separately: 1. the land value, including development costs, 2. the value of the buildings, based upon which the structure value including ancillary construction costs, as well as the value of outdoor facilities are classified.

The following information and evidence is relevant to the evaluation of the asset value: land value, size of property, year of construction, building specifications for all structures and outdoor facilities, property and soil description, data on converted space, information on any repair or maintenance backlog and details of any special operating equipment. The remaining useful life is also taken into account in the calculation. 

Average Rent for Comparable Dwellings

The average rent for comparable dwellings states the customary rent over the last four years for dwellings with a similar size, features and location. Both newly concluded leases and existing leases are included in the calculation.

The average rent for comparable dwellings is always based on a certain area. If that area has a Rental Index (Link to Glossary), the average rent will be listed there. Otherwise, the average rent for comparable dwellings can be calculated with reference to at least three comparable properties or based on an expert report. Properties that are subject to rent control and subsidized social housing are not taken into account. 


Barrier-free Access

Buildings with barrier-free access are designed such that they can be used by everyone, irrespective of any physical limitations or disability. They can be located, accessed and used without special assistance. This includes all premises, media and equipment that comply with these requirements.

Bay Window

A bay window is a protruding roofed alcove with windows found on building facades on at least one, but often over several floors. It is usually supported by some form of protruding structure, such as beams or cantilevers.

Brokerage Fee

The brokerage fee (also called commission) is the fee paid to the agent upon conclusion of a contract of sale or a lease. Standard fees for the conclusion of a lease are around one to two monthly rents. In the case of the procurement of plots or properties, three to six percent of the purchase price is due.


Pursuant to the German Act on Residential Property Ownership, the budget for commonly owned property consists of a list of all income and expenditure expected for the year. The fixed and approved budget requires the owners to pay condominium fees. 

Building Documentation

The building application is also referred to as building documentation.



In contrast to external funding, capital means all assets held by the owner. These include cash, savings, bonds, shares, funds and federal savings bonds, real estate (if this can be sold), unencumbered properties, building society savings and personal contributions. When financing a property, the level of available capital is decisive for the interest rate of the mortgage: the higher the personal capital contribution, the more favorable the rate of interest. Capital is also an important criterion when fixing payment installments, the repayment term and existing repayment security.

City Apartment

A city apartment is usually located in an attractive central location in a major city. See also Apartment.

Clearance Certificate

The clearance certificate is a certificate issued by the tax office confirming that there are no tax issues precluding the registration of the new owner in the Land Register following the purchase of a plot of land or a property. The Land Register is not authorized to make the entry if this certificate has not been submitted.

Client Account

Pursuant to the Act on Residential Property Ownership, the property manager of condominium property is under an obligation to keep the pooled funds of the condominium owners separate from his own assets. To this end, a ‘client account’ is set up. The party that manages the account is not the holder of the account. Thus, the owners are the account holders and it is clear that they own the funds on the account. However, the property manager is authorized to access the funds to cover the running costs of the property or for the purposes of administration of condominium fees. 


See Brokerage Fee

Commonly-Owned Areas

Commonly-owned areas include all parts of the property and the building that do not constitute individually-owned property. This includes, for instance, all parts of the building that are vital to the safety and continued existence of the structure, for example the roof, staircase, facade, elevator, electricity and water pipelines, as well as outside plant and facilities. All owners are jointly responsible for the maintenance of commonly-owned areas. 


In the luxury hotel business, the concierge serves the needs of guests with very high expectations. In Germany, ‘concierge’ is also the term used to refer to service staff in exclusive residential buildings or apartment blocks. Furthermore, some exclusive residential complexes offer what is known as a ‘full service’. This includes amenities such as a chauffeur service, grocery shopping, restaurant reservations and such like. Usually, residents can make use of the concierge service around the clock.


A condominium apartment is owned by its occupants. It can be situated within a multi-tenanted property or terraced housing complex, in which case the condominium then also forms part of the building. There can be several condominium apartments within one building. In legal terms, a condominium has three components: ownership of the premises of the apartment, co-ownership in common property and common areas (e.g. garage, basement etc.) and membership in the Homeowners’ Association (Link). A condominium constitutes individually-owned property (Link to Glossary). In Germany, the Act on Residential Property Ownership (Wohnungseigentümergesetz) (Link to Glossary) provides the legal basis and governs the rights and duties of the owners of condominium apartments.

A condominium apartment can provide an excellent capital investment opportunity (Link to Glossary) or retirement security. However, buying property also carries inherent risks. Anyone interested in purchasing a property should be sure to carefully calculate their monthly costs to allow them to evaluate their financial options. A rule of thumb for a favorable loan is a capital investment of at least 20 percent of the total purchase price, including additional costs (Link to Glossary).

Condominium By-laws

In residential property law, the Condominium By-laws (Gemeinschaftsordnung, GemO) govern the rights and duties of the condominium owners inter se. The by-laws are passed by the owners at the Homeowners’ Association Meeting and contain all rules on individually-owned property, commonly-owned areas, voting rights and the allocation of costs. 

Condominium Declaration

The Condominium Declaration defines which rooms and parts of the building constitute the various individually owned units and must be registered in the Land Register. When applying for entry of the Condominium Declaration into the Land Register, the partition plan (architectural drawings) must also be submitted. The plans must clearly show the division of the building and the position and size of individually and commonly owned areas.

Condominium Fee Account

The Condominium Fee Account is a statement of income and expenditure. It is also referred to as the annual account. All income and expenditure in the preceding financial year is recorded here and offset. The account is prepared annually by the property manager and must be reviewed by the Homeowners’ Association at its annual meeting. 

Condominium Fees

Condominium fees are regular contributions made by condominium apartment owners to the Housing Association, to cover the monthly costs of maintenance, repair and running costs. When purchasing an apartment, the purchaser also acquires a part of the common areas of a building e.g. stairwells, basements, loft space, underground parking area. In addition to water, energy and waste disposal, running costs also include the costs of the janitor or building superintendent and the maintenance of the stairwell and backyard or garden. The condominium fee also covers maintenance and repairs to elevators as well as heating costs. In addition, the condominium fee is used to finance a reserve fund (Link to Glossary).

Similar to the statement of service charges for rental properties, at the end of the year, a statement of account is prepared for the condominium fee. Owners then either receive a refund or are required to make additional payment.

Construction Permit

Permission must be obtained before any construction work can be carried out; this takes the form of a Construction Permit issued by the competent Construction Supervisory Authority. The construction permit includes the official confirmation that there are no public law regulations precluding the construction project. The conditions subject to which the permit is issued and the period of validity differ from one Bundesland to the next. The construction permit must be available for inspection at the construction site at all times. An application (building documentation) must be submitted to the Construction Supervisory Authority. As a rule, it is submitted by a partner such as the construction engineer or architect with authority to submit such applications.

The construction permit is valid for three years from issue, meaning that construction can begin at any time during this three-year period. The Construction Supervisory Authority must be notified of the completion of shell construction and the completion of the building two weeks prior to completion, to allow sufficient time for the requisite official acceptance. A registered chimney sweep must also confirm that the flue gas system is fit for use. This confirmation must be presented at the official conformance inspection by the Construction Supervisory Authority.

All necessary forms for the Construction Permit are available from the competent Construction Supervisory Authority.

Construction Specifications

Construction specifications are a detailed description of all the fixtures, fittings and features of a construction project. Important details include the quality and structure of the walls and roof, type of heating and glazing. The construction specifications also provide detailed information on the materials used in the course of the construction. On account of their importance in the evaluation of the quality of a property, the construction specifications are a key part of the financing application. On request, the construction specifications must also be enclosed with the application for a building permit.

Credit Rating

Credit rating refers to the creditworthiness and corresponding ability and willingness of persons or companies to repay debts. Credit ratings play an important role in the context of loan calculations. Various criteria are used to evaluate creditworthiness: these include repayment of other loans; earnings (amount, employer, job security); spending (rent, loan repayments); assets and debts (loans, liabilities or guarantees).


Data Protection

Data protection basically means the protection of personal data, for instance that of the prospective buyers of a property. Data protection is a priority at Zabel Property Group and we strictly comply with all data protection legislation. For further information, please click here (Link to existing Data Protection Policy on the Website)


See Security Deposit

Depreciation Allowance

For investment properties in Germany, the depreciation allowance can be utilized to save on taxes.

The revenue authorities assume that, over time, a property will suffer wear and tear and, as a result of this wear and tear, will decrease in value until it is ultimately worth nothing at all. The property purchaser can therefore deduct acquisition and construction costs from tax over a specified period and at a certain cost ratio. However, personally-used residential properties and plots of land are excluded from the depreciation allowance. The real estate depreciation allowance is almost identical for old and new buildings: in each case, two percent of acquisition costs can be deducted from tax over a 50-year period – this is also described as a linear depreciation allowance.  Properties built prior to 1925 (depreciation allowance of 2.5 percent over 40 years) are excluded, as are historic buildings. The depreciation allowance for historic buildings permits the deduction of modernization costs over a period of eight years at nine percent annually, and at seven percent for a further four years. The linear depreciation allowance also applies to acquisition costs (excluding renovation and refurbishment). Owner-occupiers of historic buildings can deduct nine percent of restoration costs over a period of ten years.

Restoration and modernization costs for non-owner-occupied properties can be deducted over a period of two to five years, the costs to be distributed equally. Minor repairs can be deducted immediately over one year.

Duplex Apartment

What makes a duplex apartment so special is the fact that the living area spans at least two levels, connected by an internal staircase. The German term ‘Maisonette’ originates from the French and means “little house”. 

Duties of the Property Owner

The duties of the property owner are defined in Section 14 of the German Act on Residential Property Ownership (Wohnungseigentümergesetz, WEG):

“1. The parts of the building that constitute individually-owned property are to be maintained and used - the same to apply to the commonly-owned areas - only in a manner that does not cause any disadvantage to other owners beyond that inherent to ordered communal living.

2. To ensure that persons within his household or business or to whom he assigns parts of individually-owned or commonly-owned property also comply with the duties set forth in clause 1, above.

3. To tolerate effects on individually-owned areas and commonly-owned areas insofar as such effects are attributable to permissible use as specified in clauses 1 and 2, above,

4. To permit access and use of individually owned parts of the building insofar as this is necessary for the maintenance and repair of the commonly-owned areas. Any damage caused in this context must be compensated.”


Energy Performance Certificate

The energy performance certificate is a document that demonstrates and evaluates the energy consumption of a building. It was introduced as a result of the German Energy Saving Ordinance (Energieeinsparverordnung, EnEV) in 2007. The energy performance certificate provides information on the average annual energy consumption per square meter of living area. Since 1 July 2008, the energy performance certificate has been required when selling or letting residential property constructed prior to 1965. For buildings constructed thereafter, an energy performance certificate has been mandatory since 1 January 2009. 

Estate Agent

An agent is someone who arranges sales, rental or the conclusion of contracts. Estate agents arrange contracts for plots of lands, properties, residential properties or commercial space and in some cases even mortgages. Agents earn their fees based on success - that is, a claim to a commission payment arises only if a valid contract is concluded between the parties brought together by the agent. In the case of procuring real estate, it is expected that as from 27.03.2015, the client principle will apply: this means that the party who engages the services of the estate agent will pay his fee. 

External Funding

All financial means provided in the form of a loan by a third party are referred to as external funding. In this context, third parties can be companies, banks or private individuals. A distinction is made in external funding between short, medium and long-term external funding. 


Financing Plan

A financing plan sets out, in writing, how the property is to be financed. The three basic elements are overall costs, capital and borrowing requirements. It states how much capital and how much external funding  is required. The financing plan ought to be realistically evaluated and should take account of both acquisition costs, including additional costs, and any renovation costs.

French Balcony

A French Balcony is a full-length window/door that opens to a railing that protrudes only slightly from the facade.

Furnished apartment

A furnished apartment is ideal as a transitional home or for temporary accommodation. With this kind of short-term accommodation, house-hunters can take their time looking for just the right home from a base close to their desired location, the furnished apartment providing an ideal place to relax and recover from the strenuous process of viewing properties. Another alternative accommodation concept is the Serviced Apartment (Link to Glossary).


Gallery Level

Similar to a duplex apartment, an apartment with a gallery level spans two levels, with a gallery level on the upper level and a living area on the lower level. The two levels are connected by a staircase.

German Ordinance on Estate Agents and Building Contractors

The German Ordinance on Estate Agents and Building Contractors (Makler- und Bauträgerverordnung, MaBV) defines the duties of estate agents, loan and investment brokers, building contractors and construction managers.

The provisions of the MaBV are intended to protect buyers of real estate and property. It is always advisable to review the provisions of the MaBV before concluding a Building Developers Contract.


Historic Buildings Conservation

In Germany, properties that have historic building status are subject to various requirements imposed by the competent Monument Protection Office. Historic buildings conservation is within the remit of the Länder and, as such, regulations can vary from one federal state to the next. Anyone interested in purchasing a property with historic building status should contact the competent authority in advance to establish which requirements have to be met in the event of any renovation or conversion work. Construction work should never be undertaken on a property with historic building status without a written permit from the Monument Protection Office.

The reconstruction and modernization of residential properties is extremely time-consuming and expensive, but the owner can take advantage of various tax advantages (see depreciation allowance, in particular real estate depreciation allowance) and can also benefit from subsidies provided by the KfW-Banking Group (a German government-owned development bank, based in Frankfurt, whose name comes from ‘Kreditanstalt für Wiederaufbau’ ("Reconstruction Credit Institute"), formed in 1948 after World war II as part of the Marshall Plan). Historic buildings are also worthwhile investments: properties with historic building status are popular on the rental market and, as such, any higher costs incurred can be covered by correspondingly higher rents.

Homeowners’ Association Board

The Homeowners’ Association Board is a voluntary executive body, and is not required by law. The board provides support for the property manager, but has no authority to issue instructions to the property manager or the owners. The tasks of the board can include, for example, auditing supporting documents prior to the vote on the annual statement of costs or reviewing quotes for work or services. As a rule, the board has three members, appointed individually during the annual meeting of the Homeowners’ Association. The term of office is fixed at the time of appointment.

Homeowner’s Association

Pursuant to the Act on Residential Property Ownership, (Wohneigentumsgesetz, WEG) the Homeowner’s Association consists of all condominium owners within a building complex. They have joint rights and duties, which are specified and defined in the Condominium Declaration and in the Condominium By-laws and House Rules. The Condominium Declaration stipulates which areas are individually-owned and which are commonly-owned, i.e. who owns what within the building complex. The Condominium By-laws state the various categories of ownership and corresponding rights of use and payment obligations. The Condominium By-laws furthermore stipulate how jointly incurred costs - for cleaning, drainage or landscaping for instance - are to be distributed among the owners. The House Rules govern day-to-day dealings within the property.

The meeting of the Homeowners’ Association, which must be held annually following a written invitation, decides on the rules within the condominium. The provisions include: the House Rules, the appointment of the property manager and the board, financial planning, annual accounts, reserves for maintenance and repairs as well as structural changes or more extensive repairs. Each owner automatically holds a seat and, thus, one vote in the annual meeting. 

House Rules

House rules are regulations that govern residents’ dealings with one another and the related use of the common areas of the building. All House Rules stipulate a duty of mutual consideration among residents and are intended to facilitate smooth interaction and coexistence, to protect the property and to ensure order and safety.

Housing Subsidy

If a family’s income is below a certain threshold, the state provides a subsidy for accommodation - the housing subsidy. Owners of individual units can also apply for a housing subsidy, which is then categorized as a deduction. The subsidy is based on the claimant’s income. Claimants who are homeowners must also provide an overview of all expenses for mortgage repayments and running costs of the property. The number of persons resident in the household and the local reference rent are also taken into consideration. The higher the local reference rent, the higher the subsidy or deduction. The precise conditions for a deduction can be viewed on the website of the Federal Ministry for the Environment, nature Conservation, Building and Nuclear Safety (Bundesbauministerium, BMUB). 



Was gilt es beim Kauf einer Immobilie zu beachten? In unserem Kaufratgeber (Verlinkung) finden Sie allgemeine Informationen zu Auswahl und Finanzierung einer Immobilie sowie zum Kaufvertrag. Unser Ratgeber gibt einen ersten Überblick und allgemeine Information zum Immobilienkauf sowie zu Kosten, Gebühren, Steuern und der Vorgehensweise.

Income Value Method

The income value method is one of three traditional value calculation procedures used in Germany when appraising property. The other procedures are the sales comparison approach  and the asset value procedure (Link to Glossary).

The income value method determines the value of rental properties such as e.g. multi-family dwellings or commercially used properties. Two values are taken into account in the calculation: the value of the land itself and the value resulting from the income e.g. rental income. The income value method provides a forecast of the property’s future yield.

A distinction is made between simple and comprehensive income value methods. The simple income value method takes account only of the structures. Comprehensive income valuation also includes the value of the land – here, a sales comparison approach is also required. Subsequently, the rental value is calculated based on the size of property, quality of fittings and fixtures as well as the location. Deductable running costs are then deducted from this gross yield. The property rate (Liegenschaftszins) is also factored into the calculation.  The return on land value (land value x property rate) is then deducted from the yield. The yield value is calculated based on the sum of the land value and the value of the structures on the land.

Individually-owned property

Everything within a condominium apartment that is not crucial for the continued existence, safety and functionality of the building as a whole constitutes individually-owned property. This includes, for example, the inside of the apartment and the window frames, sanitary facilities, flooring and wall coverings and non-load-bearing walls. However, individually-owned property can also comprise rooms located outside the apartment, such as a self-contained basement room or garage. It is important to differentiate precisely between individually-owned property, partly-owned property and commonly-owned property, since this governs the responsibility for maintenance. The distinction is usually stipulated in the Condominium Declaration.

Interest Rebate

Until the end of 2008, the interest rebate was a form of capital gains tax.

Since 2009, income earned on capital gains has been subject to flat rate withholding tax, so that 25 percent of earnings go to the taxman. However, income earned on personal real estate assets is excluded from this tax. In Germany, rental income does not constitute capital earnings and is instead taxed at the personal tax rate in the course of the income tax assessment. 

Internal Commission Payment

Internal commission, also referred to as seller’s commission, is a payment made by the owner to the agent in return for the latter arranging a purchase agreement. As a rule, this is not disclosed, but is instead stipulated in the agency agreement concluded between the client and the agent. Internal commission is not standard practice in all Länder and does not apply in Hamburg, Hessen, Bremen, Brandenburg and Berlin.

Investition / Investment

Eine Investition bezeichnet die langfristige Bindung von Finanzmitteln in materiellen oder immateriellen Vermögensgegenständen. Ein Investment in Immobilien (Verlinkung Glossar) wird als Geldanlage besonders geschätzt: Denn die Investition bezieht sich auf einen Sachwert und kann so als Altersvorsorge oder Renditeobjekt genutzt werden. Ob Eigentumswohnung, Wohnimmobilie, Bürogebäude oder Immobilienfonds – da die Art der Investition bei Immobilien zumeist langfristig erfolgt, sollte sie mit Bedacht erfolgen.


A property is an investment if it is let and is not purchased for the purposes of personal use. This enables owners to secure a long-term source of income and to enjoy a range of tax benefits, since interest payable on loans, maintenance and administrative costs for the property are deemed to constitute income-related expenses that can be deducted from rental income earned on the property. Any losses incurred from letting can also be claimed as deductions.


Land Register Excerpt

A Land Register excerpt is a copy of all entries to the Land Register pertaining to a certain property. A Land Register excerpt is required as the first step for prospective buyers when evaluating the mortgaging situation and can be requested from the competent Land Register Office. It is not, however, a certified document.  

Land Survey Register

In Germany, the land survey register is the official register of properties. The purpose of the land survey register is to seamlessly register all plots of land (parcels, properties) and the descriptions thereof in one Bundesland. All plots consist of a descriptive part (the real estate register), while the real estate map shows the geographic location, buildings, type of use and size.


Lofts or loft apartments are former storage or industrial premises that have been converted into residential property. The industrial style is often retained, with open plan rooms and high ceilings. This living trend dates from 1940s New York and London, when empty storage warehouses were converted into residential space. Nowadays, many apartments are constructed in the style of lofts to combine the spaciousness and industrial chic of a traditional loft with all the advantages of a modern new build.

Luxury property

Whether a luxury loft, a prestigious villa or exclusive penthouse - when it comes to luxury living, second only to the location, premium construction methods are of paramount importance. Generally, this property segment includes single-family dwellings valued at Euro 750,000 and upward or condominium properties with a price per square meter of Euro 5,000 and upward. 


Management of Individually-Owned Property

The appointed manager of a Condominium Association is responsible exclusively for the management of the commonly-owned property. All issues relating to individually-owned property are dealt with by the owner concerned in each case. However, the property manager can also be contracted to manage individually-owned property in the case of units that are let. In this case, he represents the owner vis-à-vis the tenant, the authorities and other third parties in all matters relating to the apartment.

Market value

The market value is the current market value of a property. Section 194 German Construction Code (Baugesetzbuch, BauGB) governs the way the market value is calculated. Pursuant to this, the market value is determined by the price that would be attained on the property market in the event of a sale on the relevant date of the valuation. The legal situation is also taken into account e.g. rights of way or features such as the level of development. The seller’s personal situation is not relevant. If the plot has buildings on it, the value of the property and outside facilities - calculated using the asset value procedure (Link to Glossary) and, if necessary, the income value method (Link to Glossary) - is added. 



The purchase contract for a plot of land, a property or a condominium apartment must be notarized. During the notarization process, the purchase contract must be read aloud by the notary (Link to Glossary), approved and signed by all parties to the contract in the notary’s presence. The purchaser of the property must be provided with a copy of the purchase contract at least two weeks before the notarization is set to take place. Without notarization, the contract is not legally valid. Notarial fees are based on the purchase price. As a rule, the notary’s fee for notarization and entry into the Land Register is 1.5 percent of the purchase price. 


A notary is a legal practitioner whose main task consists in certifying signatures and legal transactions. Notaries are bound by a duty of confidentiality and are subject to state supervision by the Land Department of Justice. Notaries’ work is governed by the Act Governing Court and Notary Fees (Gerichts- und Notarkostengesetz, GNotKG) and must charge standardized fees.


Outside Commission

Outside commission, also referred to as the buyer’s brokerage fee is a fee paid by the purchaser of a property to the agent. The sum of the outside commission is not fixed but lies between around three and seven percent in Germany. Other forms of brokerage fee are internal commission (Link to Glossary) or a combination of outside and internal commission. 


Part-owned areas

Part-ownership is a constituent part of individual property (Link to Glossary). Part-owned areas are those that do not serve residential purposes and constitute part of the individually-owned property to a certain degree only, e.g. garages, business premises or offices.


A patio is an open inner courtyard at the centre of a city dwelling. Often, a staircase leads up to the gallery on the first floor, often an outside staircase.

Payment Schedule

The payment schedule is a component part of the purchase agreement and defines when which payment installment or partial payment is due. The payment schedule for new-builds defines a number of construction phases (stage of construction) at which point the installments are payable.

A payment schedule should be organized according to building progress. This means that only performance already completed and inspected is paid for. No payment is made upon conclusion of the contract; 30 percent on commencement of excavation/leveling work, 28 percent of the purchase price on completion of the shell construction, with further payment to be made following completion of roofing, basic installation and glazing, on completion of interior construction and fittings, screed work, and complete build-out. Handover should take place when the property is ready for occupancy inside and work on the façade has been carried out. Handover takes place once complete build-out and, thus, all exterior work has also been completed, meaning 100 percent of the construction fee is due and payable. Experience has shown that if not all work has been completed upon handover or if the construction expert ascertains defects, the contractor is entitled to withhold from the last partial payment the sum required for completion of the remaining work.

Installments are governed by the German Ordinance on Estate Agents and Building Contractors. The 30 percent payment installment following commencement of the excavation/leveling work is a fixed sum. The contractor can stipulate in the purchase contract that the remaining twelve installments are to be condensed into a maximum[KM1]  six payment installments.


A penthouse apartment is a self-contained apartment that extends throughout the entire upper level of a multi-storey building and provides all the advantages and benefits of a single-family dwelling. The view, the size and - more often than not - a central location in a major city, make the penthouse one of the most exclusive properties and firmly in the premier league of investments. Features often include patios, roof gardens or a private pool.

Period building

A period building is a building constructed during a certain era characterized by various traditional features. While the precise era is not specified, buildings constructed prior to WWII are generally referred to as period buildings. Ceiling heights of between 3 and 4.5 meters are one of the most striking characteristics of these buildings, while wooden floorboards or parquet flooring, casement windows and cornicing on the ceilings all exude traditional charm.

Personal Requirement

If the landlord requires the property for his own accommodation purposes, he is entitled to terminate the lease, citing personal requirement. However, he is not required to inhabit the property himself - family members or persons belonging to his household e.g. a registered carer, also constitute legitimate grounds for claiming personal requirement. This does not, however, apply to non-immediate family.

If a landlord wishes to use a let property for his own personal requirements, the termination of the lease must specify, in writing, the person for whose purposes the property is required. The precise circumstances establishing that person’s interest in the property must also be outlined. Depending on the duration of the tenancy, the notice period is between three and nine months.

Properties that were converted into condominium units during the course of the lease can be terminated on grounds of personal requirements only after three years from purchase. Pursuant to Section 577a (2) German Civil Code (Bürgerliches Gesetzbuch, BGB), the Länder are authorized to issue ordinances prolonging this exclusion period to up to ten years. Only upon expiry of this exclusion period can notice of termination on grounds of personal requirements be validly issued.


A pied-a-terre is a small second home. In Germany, this second residence, also known as a secondary residence, must also be registered with the authorities. Failure to do so constitutes an administrative offense. Germany also imposes a tax on second homes, which varies depending on the Bundesland.


In Germany, a plot of land (also called a parcel) is an officially measured and marked area of the land’s surface (with a boundary). The plot is shown on cadastral maps, land register maps, in Land Registers and on maps. The real estate cadastre  shows each plot with its own plot number or property number.

Premium Property

Premium properties are generally located at top city-center addresses and are characterized by their luxurious facilities and fittings or additional amenities, such as a concierge service.

Priority Notice of Conveyance

See Transfer of Title

Proof of Insurance

Proof of insurance is confirmation that all necessary insurance is in place for the property. The Act on Residential Property Ownership stipulates that each property is required to have fire insurance and homeowners’ liability insurance. As a rule, these policies are taken out for the entire building by the Homeowners’ Association. Often, buildings insurance also covers storm and water damage. Additional insurance policies to cover against natural hazards or vandalism can also be taken out.

Property Management

A Property Management Company deals with the comprehensive control and management of properties, be it personally owned properties, buildings or plots of land, which it manages on behalf of its clients. The tasks involved are extremely wide-ranging and include e.g. purchase and sale of property, facility management and tenant management. The core property management tasks cover the following areas: commercial management, technical support and bookkeeping. Commercial management comprises everything that contributes to the value creation and development of the property, such as the selection of tenants or statement of running costs. Technical support includes monitoring functional facilities like the central heating system and, as and when necessary, drawing up a refurbishment plan, issuing calls for tenders for construction work and supervising the performance thereof. Bookkeeping is one of the most common property management tasks. It encompasses rent collection, payment processing (including interest and amortization), compiling annual accounts, monthly provisional VAT returns and preparing the budget.

Property Management Agreement

The Property Management Agreement governs the distribution of rights and duties between the Homeowner’s Association and the property manager. In legal terms, the appointment of the property manager and the conclusion of the property management agreement constitute two separate transactions. The term of office of the property manager should be identical with the term of the property management agreement. The conclusion of a property management agreement is governed by the provisions of Section 26 (1) of the Act on Residential Property Ownership (Wohnungseigentumsgesetzes, WEG).

Property Tax

In Germany, property tax is a tax on all types of property and real estate ownership. The statutory basis is the Property Tax Act (Grundsteuergesetz, GrStG). Property tax is levied by the local authority districts, whereby there are various different rates of assessment. The rate of assessment is the factor used to calculate the tax owed.

A distinction is drawn between two types of property tax: property tax A on agricultural land and property tax B on land suitable for building or for land with buildings on it.

The most important factors when calculating property tax are ratable value and market value. The ratable value applies to both undeveloped and developed land and is calculated as per a relevant date using a standardized statutory procedure. The market value, in contrast, is the current value of a property. 

Property Valuation

In Germany, property valuations are subject to a number of legal restrictions. Property valuation requires financial, legal and structural expertise to be able to accurately determine the current value (Link to Glossary) or the market value of the property (developed or undeveloped plot). Property valuation is carried out e.g. on purchase or sale of a property (Link to Glossary), for the purposes of letting, for insurance claims, mortgaging, for tax purposes, for information purposes or during company takeovers.

The value of a property depends on a number of factors, as well as on the supply and demand on the market.

There are various property valuation methods: the asset value procedure (Link to Glossary), the sales comparison approach (Link to Glossary) and the income value method (Link to Glossary).

Purchase Contract

Property purchases must be effected by means of a notarized contract, since the transaction is otherwise rendered invalid. The contract must also stipulate the conditions for the transfer of ownership. The seller undertakes to transfer ownership and the purchaser undertakes to pay the agreed price.

The purchase contract must contain information on the property owners, the land charges recorded in the Land Register and any third party rights of lien. Where there are several purchasers, the purchase contract must stipulate the ownership share acquired by each of them. The purchase contract must also include a precise description of the property and its features, as well as the exact location. The appendices to the purchase contract generally also include building plans or property brochures.

Purchasing a property

The motivations for purchasing a property are manifold: some want a secure investment, others to provide for old age and retirement, while yet others want to be free from the constraints of having a landlord. When purchasing a property (Link to Glossary) there are several points to note and a number of costs to be taken into account. Detailed information is available in our Buyer’s Guide (Link to Buyer’s Guide). 


Qualified majority decision

The Condominium By-laws can provide that certain issues can be decided only by a qualified majority vote, not by simple majority. The by-laws also define the prerequisites for a qualified majority vote.


Rate of Return

The rate of return is the overall success of an investment. The rate of return on a property is calculated based on all expenses and income, such as the purchase price including all additional costs, investment costs, maintenance costs and rental income. 


A property is ready for occupancy following construction or renovation work if it can reasonably be expected to be inhabited. This requires, among other things, safe access and the availability of sanitary facilities (WC/shower).

The absence of outdoor facilities does not have any influence on the readiness for occupancy; nor does the absence of exterior rendering. Readiness for occupancy is particularly important in the context of housing subsidies.

Real Estate Advisor

In contrast to an estate agent (Link to Glossary), a real estate advisor provides comprehensive advisory services relating to real estate. This advice can ultimately result in agency. Real estate advice comprises services such as e.g. a feasibility study on the use or construction of properties, location search, refurbishment of properties or an investor search. At Zabel Property Group, our property experts work hand in hand with a network of reliable partners to provide a truly comprehensive service - from property valuation (Link to Glossary) to property purchase contracts.

Direct links with an international network of banks, independent financial brokers, lawyers and notaries mean Zabel Property Group clients have direct access to a wealth of knowledge and advice, allowing them to make seamless real estate purchases, even from abroad.

Real Estate Funds

Real estate funds are of particular interest to investors who wish to invest in more than one property. Both open and closed funds are available.

In the case of open real estate funds, money is invested primarily in commercial properties, such as office buildings, multi-storey car parks, shopping centers or hotels. Often, several properties from different regions or countries are combined in a single property fund. In contrast, closed real estate funds are commercial holdings in a small number of properties, sometimes only a single property. Investors are thus business partners and, as such, are directly involved in the success or failure of the project. 

Real Estate Sale

The sale of a property also needs to be prepared thoroughly. When selling, the condition of the property and the completeness of the documentation are just as crucial as a well-prepared sales brochure, which should contain the following information: sales price, construction year, area, number of rooms, details on the condition of the property (redecorated, modernized, renovated), photos, floor plans, location map (Link to Glossary), energy performance certificate and monthly service charges. Once a purchaser has been found and an appointment made with the notary (Link to Glossary), the prospective purchaser needs to provide financing confirmation from the bank. 

Recessed Balcony

A recessed balcony or ‘loggia’ is the term used to describe a roofed balcony with one side or area open. In contrast to a balcony, a loggia does not protrude from the building, nor is it completely enclosed like a sunroom. 

Register of Public Easements

In Germany, the Register of Public Easements (Baulastenverzeichnis) is kept by the competent construction supervisory authorities of the administrative districts and towns, where it is available for inspection. Bavaria and Brandenburg, however, do not recognize the concept of easements and, accordingly, have no register of public easements.

A public easement is a voluntarily assumed public law obligation entered into by the owner vis-à-vis the construction supervisory authority and include e.g. rights of way, access roads or pipeline easements. Thus, an owner can undertake to allow his neighbor to drive across his land - but is under no obligation to do so. However, this enables the neighbor to furnish the construction supervisory authority with evidence of the proper development of his property and, thus, to obtain a building permit.

Easements are not entered in the Land Register. Thus, when purchasing property, prospective buyers would be advised also to inspect the register of public easements. 

REITs (Real Estate Investments Trust)

REITs are listed corporations that make their money primarily from managing or trading in real estate.

Rental Index

The rental index is a list of the average rent for comparable dwellings in the area and is compiled by towns and municipalities together with landlords’ and tenants associations. As a rule, the rental index is amended to reflect market developments every two years. However, since the rental index is not mandatory, not all cities and municipalities provide such an overview. 

Repayment Installment

Repayment installments are regular partial sum redemption payments or repayments on loans. When budgeting, the amount and due date for the installments should always be taken into account by drawing up a repayment plan.

Reserve Fund

Pursuant to the German Act on Residential Property Ownership, the reserve fund is a mandatory reserve fund for the maintenance of a condominium property, to which all unit owners regularly contribute a lump sum. This reserve is used to finance larger maintenance and repair measures to common areas, such as the replacement of the roof or the facade. The sum to be paid by all owners is dependent on the living area of the individual unit. This is usually between around 0.8 and 1.0 percent of the purchase price. 

Running Costs

Running costs are all costs incurred by the owner as a result of the ownership of the property or through the use of the building and outbuildings, facilities, fixtures and the land itself. Pursuant to section 2 Ordinance on Operating Costs (Betriebskostenverordnung, BetrKV) the types of running costs that can be allocated to the tenant are limited. These include, among others, heating costs, water supply and drainage, fees for wastewater removal and garbage disposal, street and buildings cleaning as well as landscaping and the janitor or building superintendent, property tax (Link to Glossary) and the costs of liability and buildings insurance. Costs that cannot be allocated include one-off expenses such as repair and maintenance costs, administrative costs or bank charges.

Running costs must be defined in the lease. The statutory provisions on the allocation of total running costs stipulate that these are to be allocated according to living area. This means the ratio of the living area of each tenant proportional to the total living area within the building.

However, landlord and tenant can also expressly agree that running costs are to be allocated according to number of households/users, according to co-ownership share, according to number of persons living in the unit, according to heated space or according to scope of use.

An annual statement of running costs must be prepared and presented to the tenant no later than 12 months from the end of the accounting period. The tenant then has a further 12 months within which to review the calculations and lodge any objections. The annual statement of running costs must include at least the total costs, the allocation key used and the pro rata calculation of advance payments made in each case. 


Sales Comparison Approach
The sales comparison approach is one of three traditional property valuation methods used in Germany. The others are the asset value procedure (Link to Glossary) and the income value method (Link to Glossary). The sales comparison approach is the only one of the three proceedings that takes account of the current market situation  – which is why it is also the most commonly used.

This method is used to appraise both developed and undeveloped plots of land. It is based on a comparison of similar properties and plots, which is used to calculate the market value of the property. When using this approach, it is advantageous if the properties to be compared are located in the same region and kind of location, and are similar in terms of size and features. The precise period during which the comparable properties were appraised should also be taken into account. A sales comparison approach is implemented as follows: in the first stage, the value of the land is calculated based on the purchase price database compiled by the German Committees of Valuation Experts (Kaufpreissammlung deutscher Gutachterausschüsse). However, permission to access this database must be obtained in advance. It should also be noted that the data on purchase prices is deemed significant only where there are at least ten valuations available. The land reference value maps of the towns and municipalities provide information on the land reference value, that is, the value ascertained for properties at various locations. Based on this information, the property is then appraised. Here, too, the calculation is based on the purchase price database compiled by the German Committees of Valuation Experts. Alternatively, however, property market reports or market research can also be included when appraising the buildings. Finally, the calculation also takes account of the following points: infrastructure, fittings, features and structural condition of the property. 


Schufa is the abbreviation of “Schutzgemeinschaft für Allgemeine Kreditsicherung” - the Protection Company for General Creditworthiness. Schufa collects consumer data provided by its partners and assesses lists of debtors provided by the German District Courts. Individuals will be entered into this database if they have been required to submit an affidavit (disclosure of financial situation). The stored data includes personal details (surname, name, date of birth, address and previous address), data relating to bank accounts, cell phone accounts, credit cards, consumer loans or hire purchase agreements and on loans and guarantees. The database also includes information on payment issues, late payments and the cancellation of credit cards or bank accounts.

Schufa’s partners include banks, building societies, insurance companies, distance selling companies, telecommunications firms, leasing companies and department stores. Investment brokers are not Schufa partners.

A distinction is drawn between two kinds of reports: A-reports and B-reports. B-reports contain information only on whether the individual has complied with contractual obligations and, for instance, repaid a loan as agreed; A-reports are more comprehensive. When issuing loans, opening a current account, issuing credit cards, partners are provided with information on all liabilities.

The “scoring procedure” employed by Schufa is a forecasting procedure and relates to the percentage likelihood of an individual’s failure to make payments. The score is calculated by computer and takes the form of a percentage value between one and one hundred. The lower the score, the less favorable the financial forecast. 

Second-Home Tax

Second-home tax is payable in some cities in Germany if, in addition to the main residence, a second home is also used and is registered with the authorities as a secondary residence. It is irrelevant whether both dwellings are located in the same city. Second-home tax is not due if the second home is let and not for personal use. However, second-home tax can be deducted from tax in the context of the maintenance of two households.

Second-home tax is calculated on the basis of the net annual rent. If the home is a condominium, reference is often made to the local reference rent. The average rate of tax is 10 percent. However, while it is only five percent in Berlin, in some places more than 20 percent are due. 

Security Deposit

A security deposit is a form of security payment provided by the tenant to the landlord. Though voluntary, it is customary for the lease to provide for the payment of a security deposit. The security deposit may not exceed the maximum amount of three net rents and is payable in no more than three installments. The landlord is required to lodge the security deposit on an interest-earning account. When the lease comes to an end, the landlord must reimburse the remaining security deposit, including interest earned, to the tenant. If there has been damage to the property or if the tenant owes any payments for rent or service charges, the landlord is authorized to deduct these sums from the security deposit. 

Serviced Apartment

Serviced Apartments are suitable both as long-term or temporary accommodation. Often, these apartments have all of the amenities of a hotel. As a rule, serviced apartments are fully furnished (Link to Glossary) and have a fully-fitted kitchen with all the necessary appliances and utensils, so that even long-term tenants do not have to worry about having to equip their home. Often, additional services such as a cleaning service or reception are also included. Further information is available in the Serviced-Living Concept section (Link to Glossary)

Serviced-Living Concept

The serviced-living concept is a unique service developed by Zabel Properties Group: after purchasing a property, owners are keen to capitalize on maximum rental prices with as little effort as possible. With this in mind, Zabel Immobilien Group fits the apartment on behalf of its clients with top-quality fixtures and fittings, from furniture to cutlery; next, Zabel finds suitable tenants and arranges the lease. In addition to the furnishing service and an interior design service tailored to the premium tastes and exacting demands of its clients, the serviced-living concept also includes cleaning services, as well as a concierge. In real terms, this means: furnished accommodation with temporary leases of 3 to 12 months - the ideal alternative to a hotel.

Site Plan

In Germany, the site plan comprises a written section and an illustrated section and forms a component part of the application for a building permit. The written section describes the building plot, states the name of the developer, any easements and neighboring properties. It also includes figures on total area, dimensions, open spaces and other details of the construction project.

The graphics definitively show the outline of the construction project in the plan view of the plot of land and also provide a view of the project in the context of the surrounding area. Neighboring plots and developments situated thereon are also shown, to facilitate the evaluation of the construction project. The roof shape, roof pitch and clearance are all also stated. The official site plan is generally prepared on a scale of 1:1000 or 1:500.

Smoke Alarm

A smoke alarm is a technical device triggered by fire or smoke that emits an alarm, helping to ensure safety. Smoke alarms are mandatory in almost all Bundesländer. In Berlin, this requirement is set to enter into force for all new buildings from 2016; existing buildings have until 2020 to install smoke alarms as standard.

Special Use Rights

The Act on Residential Property Ownership defines special use rights as exclusive rights of use held by an individual in a precisely designated part of commonly owned property. This can relate, for instance, to parts of the garden or open parking areas.


A studio apartment is an apartment comprising one room with a kitchenette. Only the bathroom is in a separate room.


Tenant’s Duty of Care

The duty of care is the obligation incumbent upon the tenant to treat the premises let by him, as well as any common areas, with due care and to notify the landlord in the event of any damage. Fitments and fixtures installed by the tenant must not impede or cause structural damage; dowel holes are, however, permitted. 


A top-floor apartment is located directly below the roof. In period buildings, the sloping walls are a distinctive characteristic of top-floor apartments. 

Transfer of Ownership

Ownership is transferred if a property changes hands, meaning all rights and duties of the seller pass to the purchaser. As a rule, ownership is transferred only once the purchase price has been paid in full - at which point the purchaser holds all rights of use in respect to the purchased property. In the case of let properties, once ownership has transferred, the new owner has all rights (such as entitlement to rental income), but must also fulfill all duties e.g. payment of condominium fees or property taxes. 

Transfer of Title

The transfer of title is a crucial part of the conveyance of real estate and describes the agreement between the seller and the purchaser of a property. It is therefore also often referred to as a priority notice of conveyance (Link to Glossary). The transfer of title becomes legally effective only once the purchaser has been entered into the Land Register as the new owner. Several legal requirements must be observed when transferring title: in order for the transfer of title to be legally valid, an entry amending the rights must be made to the Land Register and a notary (Link to Glossary) must be present. As a rule, the transfer of title and notarization thereof are performed together with the notarization of the purchase contract.