Pets for tenants (Lexikon) – Dog, cat & sloth

Pets in rental properties are far more than an emotional issue for landlords and investors — they are a tangible economic factor. Investors who own an apartment building or a rented condominium must know: A blanket clause prohibiting pet ownership in the lease agreement has been deemed invalid since the BGH ruling of March 20, 2013 (Case No. VIII ZR 168/12). This has direct consequences for tenant selection, maintenance reserves, renovation costs during tenant changes, and thus for your net return. This guide shows with concrete figures how you can legally and profit-oriented manage the topic of pets for tenants.

Legal situation 2024: What landlords are actually allowed to prohibit

German case law distinguishes three categories of pets — and exactly here lies the lever for every contract design. Investors who correctly draft their lease agreements avoid expensive eviction lawsuits and court costs of up to 3,000–8,000 € quickly.

The consequence: A clause such as “prohibition of keeping any kind of pet” is invalid — the tenant is still allowed to keep a cat. Instead, a permission clause with individual case assessment is more sensible. This must be clearly formulated in every rental agreement, otherwise it will not hold up in case of a dispute.

Economic implications: What pets cost in terms of return

Pet ownership has a measurable impact on management costs. Experienced landlords factor in an additional charge of approximately 0.15–0.30 % of the investment sum per year for extra wear and tear and renovation needs when tenants move out.

Example calculation: Condominium in Düsseldorf, purchase price 380,000 €, cold rent 1,350 €/month, management costs 18 %.

The difference in return between pet-free and pet-owning tenants averages 0.15–0.50 percentage points. Sounds small — but over 20 years of holding period, this results in a cash flow difference of 40,000–80,000 €. Those who want to calculate the exact figures for their property should best use the Calculate Net Return calculator and compare the scenarios directly.

Security Deposit Strategy: Higher Security with Pets

The security deposit is capped at a maximum of three net cold rents according to § 551 BGB — an additional “pet deposit” is invalid and not permissible. This is the most common landlord mistake. Instead, investors should consistently utilize the maximum deposit, especially for tenants with a dog.

With a cold rent of 1,350 €, this means a deposit of up to 4,050 €. This amount covers typical pet-related damages in case of damage:

• Hardwood Floor Scratches — 1,500–4,000 € depending on room size
• Wallpaper/Wall Texture — 800–2,000 € completely new
• Door Frames — 200–500 € per frame
• Odor remediation — 1,500–3,500 € (Ozone/Full renovation)
• Carpet replacement — 35–80 €/m²

Tax treatment: Deducting pet-related damages

Renovation and damage repair costs after a tenant’s move-out are fully deductible as business expenses according to § 9 EStG — regardless of whether they are caused by pets or not. It is important to correctly distinguish between immediately deductible maintenance costs and capitalization-required renovation costs (§ 6 Abs. 1 No. 1a EStG, “purchase-related expenses”).

Specifically: If renovation costs within the first three years after purchase exceed 15% of the purchase price (net), they must be depreciated over 50 years — instead of being fully deductible immediately. With a purchase price of 380,000 €, this threshold is 57,000 €. However, pet-related damages can usually be classified as ongoing maintenance costs if they are properly documented and paid for by the tenant via deposit.

Practical Tip: Have a handover protocol with photo documentation created. In case of a dispute, these are the only pieces of evidence that count in court. As described in the guide Real Estate as an Investment, a professional tenant and damage documentation is one of the most underestimated return levers.

Tenant Selection: Pet owners are not necessarily bad tenants

Data from the GdW landlord statistics show an interesting picture: Pet owners have an average 23% longer rental period than non-pet tenants (on average 6.8 years vs. 5.5 years). This is extremely relevant from a business perspective, because each tenant change costs:

• Void period — average 1.5 months of lost rent
• Standard renovation — 3,000–8,000 € per apartment
• Real estate agent costs — at the landlord’s expense
• Credit check & management — 200–500 €

Over 20 years, a long-term pet tenant can save the investor up to 15,000–25,000 € in turnover follow-up costs. This saving often fully compensates for the higher depreciation costs. For investors with larger portfolios, it’s worth looking at the Cashflow Calculator to model tenant turnover scenarios cleanly.

Exotics and Dangerous Animals: This is where it gets tricky

With sloths, reptiles, spiders or restricted dogs, a different logic applies. These animals are often subject to the Federal Nature Conservation Act (§ 44 BNatSchG) or state dog laws. Landlords are generally allowed to prohibit keeping them — and should do so. The reason: insurance legal complications, higher risk of damage and potential conflicts with neighbors.

A practical example: A sloth requires a constant room temperature of 25–30 °C and 80 % air humidity. The resulting mold damage in the apartment can cause renovation costs of 15,000–40,000 € — far exceeding the maximum deposit. Investors must secure against such risks through clear contract clauses and individual approvals with a written right of revocation.

Action Recommendation: The Decision Tree for Investors

The following scheme has proven effective in practice and should be systematically included in every investor lease agreement:

1. Small pets — generally allowed, no clause required
2. A cat / small dog — allow in general, maximum deposit
3. Large dog / multiple pets — written approval for individual cases
4. Breed-specific dogs / exotic animals — written permission with right of withdrawal
5. Commercial animal keeping — generally prohibit (breeding, boarding)

Who takes over a property with an existing pet-owning tenant should plan a substance check of the affected apartment in the Apartment building evaluation analysis before the purchase. When selling the property after a short holding period, the Real Estate Capital Gains Tax should also be considered — pet renovation costs reduce the taxable gain from the sale.

FAQ: Pets for Tenants from an Investor’s Perspective

Can a landlord ask for an additional pet deposit?

No. According to § 551 BGB, the security deposit is strictly limited to a maximum of three net cold rents — an additional “pet deposit” on top of this is invalid and would result in the tenant’s full right to reimbursement in case of a dispute. However, you can fully utilize the permissible maximum deposit and include a specific renovation and damage compensation clause referring to pet ownership in the lease agreement. This is legally secure and provides you with the necessary financial backing in case of future damage claims.

How does pet ownership affect the resale value of my property?

An apartment with long-term pet ownership can suffer a price reduction of 3–8 % compared to the comparable property when visible damages, odors, or wear and tear are present. If professional renovation is carried out before the sale, this discount practically disappears entirely. Renovation costs of 8,000–15,000 € usually pay off several times over through the higher achievable purchase price. An objective evaluation is important — ideally use the income value method for this, which reflects the actual rental value independently of the visual condition.

Can I revoke the permission for pet ownership later?

An once-granted, unlimited pet keeping permit can only be revoked in exceptional cases — for example, in cases of proven disturbances, endangerment of other tenants, or significant damage. It is more sensible to initially issue a time-limited permit or one with specific conditions, for example, with an explicit right of revocation in case of breaches of duty. This allows you as a landlord to remain legally flexible without unfairly disadvantaging the tenant. In case of conflicts, legal advice is recommended before each step — a faulty termination can quickly cost several months’ rent.

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