Selling apartment with tenant

Selling an apartment with a tenant – selling a rented condominium can be a profitable way to free up capital, reinvest tied equity, or strategically restructure a portfolio. However, the process comes with significant peculiarities: tenant rights, notice period restrictions, right of first refusal, and a significantly smaller pool of potential buyers lead in practice to price reductions of 20 to 35 percent compared to selling an empty property. Find all the details about the entire process in our Real Estate Sales Guide. In this article, you will learn what rights tenants have, how to find the right buyer, what tax pitfalls to watch out for, and how to achieve a market-appropriate price despite the rental agreement.

Key Facts -

Selling an apartment with a tenant: What you need to know

Protection against termination: Sale does not end the lease (§ 566 BGB)

Rentaler’s right of first refusal (§ 577 BGB)

Notice protection period after conversion (§ 577a BGB)

Lease termination agreement: The expensive, but clean solution

Landlord’s Right to View

Private users: Termination due to personal need

Requirements for a valid termination due to personal need

Notice periods in case of personal need

Hardship clause and risks

Rented vs. vacant: The direct comparison

Investors as target group: How investors think

Evaluation via the rent multiplier

Which types of investors are suitable?

Tax aspects when selling

Speculation tax (§ 23 EStG)

Selling an apartment with a tenant: What you need to know

The sale of a rented apartment is significantly more complex than the sale of an empty property. From the protection against termination under § 566 BGB to the tenant’s right of first refusal (§ 577 BGB) and up to the waiting periods for termination due to personal need (§ 577a BGB), there are numerous legal hurdles. Moreover: The buyer pool shrinks – end-users are out, investors become the main target group. Let’s take a closer look at the most important points.

Protection against termination: Sale does not end the lease (§ 566 BGB)

Selling the apartment does not terminate the rental agreement. The central principle “sale does not end the lease” is enshrined in § 566 BGB: The new owner assumes all rights and obligations of the existing lease agreement. Rent price, notice periods, clauses regarding cosmetic repairs, modernization agreements – everything remains unchanged. The tenant still has a right to undisturbed possession of the apartment as long as they fulfill their contractual obligations.

Practically speaking: Even though the rent has been below market level for years, the new owner cannot simply adjust the contract. Rent increases are only possible within the capping limit (15–20 percent over three years) and the local comparative rent. Exactly this point leads to significant price discounts for properties that are heavily under-let.

The most important facts at a glance:

§ 566 BGB: Purchase does not terminate the lease
Buyer takes over the lease agreement including all clauses
Security deposit also transfers to the buyer (§ 566a BGB)
Rent increases are only possible within the legal framework
Seller remains responsible for outstanding rent up to the handover

Rentaler’s right of first refusal (§ 577 BGB)

When an apartment building is first divided into individual condominiums and sold to third parties, the tenant is entitled to a statutory right of first refusal. This protective mechanism is intended to prevent tenants from being evicted from their apartments through conversion and sale. Important: The right of first refusal applies only to the first sale after division – not to every subsequent resale.

This is how the right of first refusal works in practice:

Seller must inform the tenant in writing about the content of the purchase agreement
Tenant has two months to exercise the right of first refusal
Exercise of the right must be done in notarial form
Tenant enters into the same conditions as the third-party buyer
Exception: Sale to family members or household members – no right of first refusal applies here

What other special considerations should be taken into account when dividing a multi-family house, you can find out here: Selling apartments individually.

Notice protection period after conversion (§ 577a BGB)

An often underestimated point: If a rental apartment is converted into a condominium and sold, the new owner is subject to a notice protection period for personal use and value-based termination. During this period, the buyer may not terminate the lease for personal use.

Overview of the protection periods:

Federal minimum protection: 3 years from the transfer of ownership
In tight housing markets (by state regulation): up to 10 years
Applies to major cities such as Munich, Berlin, Hamburg, Cologne, Frankfurt
The period begins with the registration of the new owner in the land register

For investors, this is neutral to positive – they want to keep the property rented out anyway. For self-occupying buyers, this lockout period can be a deal-breaker and effectively excludes this buyer group.

Lease termination agreement: The expensive, but clean solution

If you want to sell the apartment empty in order to achieve the higher self-occupying price, the lease termination agreement is often the only legally secure way. The tenant voluntarily waives his tenancy rights in exchange for a lump sum and moves out at an agreed time.

Market-standard compensation amounts:

Standard: 6 to 12 net cold rents
In tight markets: 12 to 24 net cold rents
Approximate range: 10,000 € to 50,000 €, in prime locations also significantly more
Rule of thumb: Compensation should be below the price difference between rented out and empty

Calculation example: An apartment in Munich with a cold rent of 1,200 € generates 480,000 € when rented out, and 620,000 € when vacant. Difference: 140,000 €. A severance payment of 30,000–50,000 € is economically sensible here, as net additional revenue of 90,000–110,000 € remains.

Landlord’s Right to View

Whether it’s a duplex apartment or a micro apartment – if you want to sell your apartment, you are allowed to arrange viewings. However, the right to view is clearly limited. The landlord must respect the tenant’s privacy, notify appointments in good time (usual: at least 3–4 days notice) and state the purpose.

What the courts consider reasonable:

Maximum one viewing per week
Weekdays between 10 and 7 pm, limited on Saturdays
Notice period: at least 24 hours, better 3–7 days
Viewing duration: max. 30–45 minutes per appointment
Group viewings with multiple interested parties are allowed, but not mandatory

Tip from practice: Offer the tenant a small reimbursement (e.g. 50–100 € per appointment) or a one-time compensation. This significantly reduces conflicts and ensures cooperative appointments.

Privatjet jetzt buchenNeu von LukinskiPrivatjet buchen

Private users: Termination due to personal need

Requirements for a valid termination due to personal need

If the landlord needs the apartment for themselves or close relatives, a termination due to personal need is possible – but only under strict conditions. A general statement is not sufficient; the need must be specifically and verifiable.

Who counts as “close relatives”:

Spouses, registered life partners, children, parents
Siblings, grandparents, grandchildren
In-laws, in-law children (under certain circumstances)
Caregivers for family members in the household

Notice periods in case of personal need

The statutory notice periods depend on the rental duration:

Rental duration up to 5 years: 3 months notice period
Rental duration 5 to 8 years: 6 months
Rental duration over 8 years: 9 months
In case of conversion: additional 3–10 year waiting period (§ 577a BGB)

Hardship clause and risks

The tenant can file an objection under § 574 BGB if the termination would cause particular hardship – for example, in cases of old age, serious illness, pregnancy or lack of alternative accommodation. In addition, caution is advised: if the stated personal need is not subsequently implemented (“fabricated personal need”), claims for damages in the five- or six-figure range may arise.

Requirements for an effective personal need termination at a glance:

Lawful, specific interest of the landlord
Personal use for themselves or close relatives
Written justification with name and reason for the need
Compliance with legal notice periods
Observance of the blackout period after conversion
Actual implementation after moving out is mandatory

Rented vs. vacant: The direct comparison

The decision “sell rented or sell vacant” has significant financial consequences. Here is a direct comparison of the most important factors:

Criterion	Rent out sell	Empty sell
Selling price	20–35 % below market value	100 % market value
Buyer group	Investors, investors	End-users + investors
Marketing duration	Often longer (3–6+ months)	Usually faster (1–3 months)
Evaluation standard	Rent multiplier / return	Comparative value / asset value
Viewing effort	High (tenant coordination)	Low (always possible)
Home staging possible	No	Yes
Risk of rental default	To be borne by the buyer	Not relevant
Negotiation room	Limited	Larger

Privatjet jetzt buchenNeu von LukinskiPrivatjet buchen

Investors as target group: How investors think

Evaluation via the rent multiplier

While end-users buy emotionally and use comparative prices as a benchmark, investors evaluate real estate purely numerically via the rent multiplier (also: multiplier). The formula: purchase price ÷ annual net cold rent = factor.

Market factors per location:

A-locations (Munich, Hamburg city center): factor 30–45
B-locations (Dusseldorf, Stuttgart, Cologne): factor 22–32
C-locations (medium-sized cities): factor 16–24
D-locations (medium towns): factor 12–18

Example calculation: An apartment with a cold rent of 1,000 € (12,000 € per year) achieves a selling price of 420,000 € in Munich with a factor of 35, but only 264,000 € in Leipzig with a factor of 22. Anyone who is subletting should check before selling whether a legally secure rent increase is possible – every additional euro of monthly rent increases the selling price by the factor × 12.

Which types of investors are suitable?

Private investor: Seeks 1–3 properties for retirement, factor-oriented
Owner / Family Office: Buys portfolios, focuses on cash flow and location quality
Fix-and-Flip Investor: Seeks properties with potential for value increase, often with expiring rental agreements
Institutional investors: Relevant only from portfolio sizes upwards, high return requirements

Tax aspects when selling

Speculation tax (§ 23 EStG)

If an rented apartment is sold within 10 years after acquisition, speculation tax at the rate of your personal income tax rate (up to 45 % plus solidarity surcharge) applies to the profit. The period begins with the date of the notarized purchase contract – not with handover or land register entry.

Important points regarding the speculation period: