Fixed-term rental agreements offer a number of benefits for both tenants and landlords, but they also pose risks and legal challenges. In this article we examine the advantages and disadvantages of fixed-term rental agreements and provide a comprehensive overview of the legal framework.
The most important thing in brief
- Fixed-term rental agreements offer flexibility for tenants and landlords, but are legally complex.
- Advantages for tenants include short-term commitments and often furnished apartments.
- Landlords benefit from planning security and can achieve higher rents.
- Disadvantages include limited protection against termination for tenants and possible vacancies for landlords.
What is meant by fixed-term rental contracts?
A fixed-term rental agreement, also known as a temporary rental agreement, is a rental agreement that is concluded for a specific period of time. After this period has expired, the rental agreement ends automatically without the need for termination. This form of rental agreement differs from the open-ended rental agreement, which is concluded for an indefinite period of time and can only be terminated by termination.
The time limit must be recorded in writing in the rental agreement and be legally permissible. According to Section 575 of the Civil Code (BGB), there are time limits only permitted under certain conditionsfor example if the landlord needs the apartment for himself or close relatives after the rental period has expired, wants to renovate it extensively or wants to make it available to an employee.
Benefits for tenants
Flexibility and mobility
For tenants who need to be flexible professionally or privately, fixed-term rental contracts offer an ideal solution. They make it possible to live in a city or region for a limited period of time without making a long-term commitment. This is particularly attractive for temporary workers, students or people in phases of life change.
Furnished apartments
Temporary rental apartments are often furnished, which reduces the effort involved in moving. Tenants save on purchasing and transporting furniture and can move in immediately. This is particularly useful for people who only want to stay in one place temporarily.
Advantages for landlords
Planning security
Landlords benefit from a clear time limit on the tenancy agreement. You can better plan the future use of the property, whether for your own use, sale or renovation. This offers greater flexibility in property management.
Higher rental prices
Fixed-term rental agreements, especially for furnished apartments, allow landlords to charge higher rental prices. The additional service and short contract period often justify an additional charge, which can increase the return on the property.
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Disadvantages for tenants
Limited protection against dismissal
Tenants of fixed-term rental contracts have limited protection against termination. You can only end the rental agreement early if there is an important reason or if this has been expressly agreed in the rental agreement. Otherwise you are bound to the entire contract term.
Uncertainty about extension
Once the rental agreement has expired, there is no automatic right to an extension. This can lead to uncertainty, especially if the tenant wants to stay in the apartment for a longer period of time. A new agreement with the landlord is necessary, which is not always possible.
Disadvantages for landlords
Risk of vacancies
After the fixed-term rental agreement expires, there is a risk that the apartment will be empty if no new tenant can be found. This can lead to loss of income and increases the administrative burden of re-letting.
Legal pitfalls
Fixed-term rental agreements are subject to strict legal requirements. If these are not adhered to, the rental agreement can be considered unlimited. This limits the landlord's rights and can lead to unwanted long-term obligations.
Legal framework
Permissible reasons for time limits
The German Civil Code only provides for three permissible reasons for limiting a rental agreement:
- The landlord or a family member would like to use the apartment themselves after the rental period has expired.
- Extensive construction work that makes it impossible to continue the rental agreement.
- At the end of the rental period, the apartment should be left to an employee of the landlord.
The reason for the fixed term must be specifically stated in the rental agreement. General formulations are not sufficient and can make the time limit ineffective.
Consequences of ineffective time limits
If the time limit is ineffective, the rental agreement is considered to be unlimited. The landlord can then only terminate the contract if the statutory notice periods and reasons are observed. This can significantly limit flexibility and introduce unexpected obligations.
Rights and obligations of both parties
During the contract term, both tenants and landlords are bound to the agreed conditions. Early termination is only possible under special circumstances. Tenants have the right to find out three months before the end of the rental period whether the reason for the fixed term still exists. Otherwise, you can request an extension of the rental agreement.
Tips for tenants
Check the contract carefully
Before signing a fixed-term rental agreement, tenants should check the contract carefully. Make sure that the reason for the limitation is stated clearly and specifically. If anything is unclear, it is advisable to seek legal advice.
Clarification of extension options
Speak to the landlord early on about the possibility of extending the contract. Clear agreements can avoid uncertainty and provide planning security.
Tips for landlords
Use legal advice
Due to the complex legal requirements, it is advisable to consult a specialist lawyer or a professional property management company. In this way you can ensure that the rental agreement is legally secure and that the fixed term remains effective.
Tenant selection and credit check
Careful tenant selection is also important for short-term rental agreements. A credit check and obtaining references can help avoid defaults and other problems.
