Frequently asked questions from landlords during the coronavirus crisis

Since the corona pandemic, our economy has been suffering massively from its effects. An increasing number of employees have to go on short-time work and subsequently fear losing their jobs. Self-employed individuals and managing directors are worried about massive drops in sales and are desperately looking for alternatives to avoid insolvency. To get through this difficult time for all of us, it is important to know the rules and obligations. We would like to provide you with a small guide for this purpose and are happy to assist you with advice and support.

Is the tenant still obligated to pay their rent?

Yes, the tenant must continue to meet their rent payment obligations, even if they are short on cash. If rent arrears of more than one month accumulate, the landlord is generally permitted to issue a termination without notice. Due to the corona pandemic, there is a change. Termination due to default on payment is not possible in the period from April 1, 2020, to June 30, 2020, if the rent arrears accumulate during this period due to the COVID-19 pandemic. The tenant must prove their financial hardship. They can do this by submitting a certificate from the employer or something similar. In any case, the tenant must not simply stop paying rent, but must credibly prove financial hardship due to the Covid-19 pandemic. Thus, the tenant gains time for now. However, they should always be aware that termination due to rent arrears could certainly become possible again after June 30, 2020.

Generally, a provision in the German Civil Code (BGB) makes it possible to factor in default interest. The amount of default interest ranges between four and six percent.

If the tenant can foresee that they will no longer be able to pay the rent, it is advisable for them to contact their landlord immediately. The landlord might agree to a deferral of the rent. Payment in installments would also be an option. If the landlord agrees to this, it happens solely on a voluntary basis. By law, the landlord is not obligated to do so.

The tenant should inquire with the competent authority whether they are entitled to housing benefit. It is possible that this assistance is due to the tenant.

What must be considered in the event of a termination?

Terminations originating from the period before April 1, 2020, remain possible. If the landlord terminates the lease due to personal use or tenant misconduct, the termination remains valid.

Apartment handover

Due to the curfew imposed in Bavaria, leaving the apartment is only permitted for valid reasons. One such valid reason is, for example, the inspection of a reported damage in the apartment. It gets more complicated with the apartment handover at the end of a tenancy. A joint inspection is not mandatory. Thus, tenants can document the apartment when moving out using photos and video and record this in writing in a protocol. Meter readings must also be documented. The keys can subsequently be handed over to the caretaker or the responsible property management. Both parties should agree to this procedure in advance and record it in writing. Once the landlord has received the keys and the documentation, they can then inspect the empty apartment themselves and document any overlooked defects in writing and through photos. If you need a form for the apartment handover, you are welcome to request a template for your handover documentation from us.

Apartment viewings during the corona pandemic

In principle, apartment viewings can also be carried out during the curfew. Viewings should only take place for valid reasons. During viewings, prospective tenants are only allowed to view the apartment or house individually. Hygiene and social distancing regulations must be observed at all times. However, if people live in the apartment who belong to a risk group due to pre-existing conditions or are of advanced age, they are not obliged to tolerate a viewing. You can read how we as real estate agents can conduct viewings here.

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Modernization measures are pending during the corona pandemic

If modernization measures are planned for your property, they may be carried out if neither craftspeople nor residents are endangered in the process. Here, too, it is important to comply with the prescribed safety and hygiene standards. It is recommended to conclude a corresponding agreement in this regard with the contractor. This can take the form of notices in which the applicable regulations are formulated in writing. Procedures in the event of confirmed illnesses should also not be missing. While it is true that the homeowners association must hold a meeting once a year, these are being canceled or postponed during the current curfews. The authorities can also prohibit such meetings. However, if a homeowners meeting is held despite such an order, this leads to the invalidity of the resolutions passed there. The property manager can have urgent measures carried out, such as in the event of a heating failure or a burst water pipe, even without corresponding resolutions by the homeowners. The economic plan remains in force until a new plan is resolved. If the term of office of an appointed property manager ends during the corona crisis, they remain in office until a new property manager is appointed.

What options do you have for active real estate loans?

It is not uncommon for property owners to finance their acquired real estate through rental income. If this income fails to materialize, the landlord can quickly run into financial difficulties. To provide some relief for the owner in this regard, the legislature has resolved the following:

• Payment obligations under consumer loan agreements can be legally deferred for three months if they become due by June 30, 2020.
• The loan agreement will then be extended by three months.
• The termination of the loan is excluded in these cases.

As already described, these regulations apply exclusively to consumer contracts. The question naturally arises as to when a landlord is still acting as a consumer in the legal sense. Here, the number of rented properties is of decisive importance. Exactly where the limit lies must be decided on a case-by-case basis in accordance with jurisprudence.

What tax reliefs can landlords and property owners expect?

Due to the corona pandemic, the Federal Ministry of Finance has simplified the regulations for the deferral of income, corporation, and value-added tax. Applications are to be submitted to the responsible tax authorities. Further information and the necessary forms can be found on the website of the Bavarian tax offices:

https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Weitere_Themen/Coronavirus/default.php?f=LfSt

If the property and trade taxes are to be deferred, this falls within the jurisdiction of the respective municipality. Many local authorities also indicate a willingness to defer the taxes. Naturally, a corresponding application must be submitted to the responsible municipality. However, the property and trade taxes are not waived, only deferred. In practical terms, this means they must be paid to the municipality at a later date.