Renting a furnished apartment in Berlin and other major cities is an interesting experience for many landlords - and not just since the introduction of the rent control law. The rising amount of apartment-owners taking on the challenge is unsurprising, due to the quick growth of the target group of renters. All those who spend longer periods of time in a foreign city for professional reasons will usually rent a furnished apartment for a limited period. In addition, there are a number of people who relocate to Berlin and need an apartment for a transitional period, until they have found their own unfurnished apartment.
Rental prices have increased in recent years, resulting in an increase in prices of furnished apartments for temporary accommodation. There is no rent index for temporary accommodation, so many landlords are seeking advice on how to calculate appropriate rental prices.
In the following article landlords can find a range of information and tips to help work out a fair renting rate.
How do I calculate the rent for a furnished apartment?
Most landlords let their flat fully furnished, and for a limited period of time. This is for one simple reason: to remain flexible and have the possibility to use, sell, etc. the apartment yourself in the future. Of course, the rental price that the landlord can achieve with a furnished apartment is also higher than that of an empty apartment. The costs of these investments are also higher, however, both the equipment of the flat, repairs, and also broker costs and/or agency costs can be written off with the income tax as income-related expenses.
Many landlords need to find out the amount of rent they can achieve for a furnished apartment that is rented for a period of time, as well as the price per square meter. However, the answers depend on a variety of specific circumstances.
Which factors determine the rental price of a furnished apartment for a temporary period of time?
The rental price depends on several factors. In the case of temporary accommodation, a flat rate which includes all extra costs such as heating, electricity, Internet, etc., is always determined. The rental price of a furnished apartment must be calculated according to several internal and external factors.
Flats in particularly sought-after locations such as Mitte, Prenzlauer Berg, Charlottenburg, and Schöneberg are inevitably more expensive than flats in the surrounding areas such as Lichtenberg. The neighbourhood, road, connection, proximity to public transport, supermarkets, etc. are all necessary criterion to consider.
Size of apartment and rooms
The size of the floor plan also plays an important role. For smaller apartments - one or two room apartments of approx. 40 - 60m² there is a large target group, whereas the demand for larger apartments is lower. Up to approx. 140m² furnished apartments can be rented on a temporary basis, provided that the apartment has more than one bedroom, or a multifunctional room that can be used as a study, bedroom, or guest room.
Apartments larger than 140m² are more difficult to let. Even tenants who have a generous budget prefer to rent smaller apartments, because large ones naturally need more maintenance. Smaller apartments are more practical for most tenants, as long as they cover all their housing needs. A landlord should take this into account when setting prices.
Number of bedrooms and number of tenants
Larger apartments with several bedrooms, that can be rented to a family or to a couple requiring an additional guest room, can set a higher rental price than apartments with only one bedroom.
Functionality and equipment
The functionality of the equipment must also be measured. If the equipment is of high quality and the apartment is well-kept, and whether the building is modern or renovated, an elevator is available, a balcony or terrace is included, a spacious modern bathroom, a guest toilet, or a dishwasher and dryer available.
Furnishing with living on time
The furnishing is also key to setting the price. There are now a wide range of furnished apartments in Berlin on the market - which has raised the competition. Some flats, which have been rented out the whole year without any previous problems, now have a hard time on the market. Today's tenants compare the different offers and decide either by price, or by preference. It is, therefore, worth investing a little time and money in furnishing your home. At the moment the Scandinavian style is decidedly on-trend.
People who move to Berlin because of a job are not just looking for a practical in between solution, but a temporary home. Nowadays it is no longer enough to fill the apartment with lower-end, cheap furnishings, unless you want to rent it at a very low price (which there is still a market for) Read our guide on how to furnish an apartment here.
Availability of a furnished apartment
Ideally, your apartment is available for an unlimited time. This does not mean that a tenant can rent indefinitely, however, most commonly an apartment that is available for an unlimited period will fetch a higher rent than an apartment with limited availability.
Many tenants begin by renting for a few months, before extending the lease - often several times. An advantage of temporary living for tenants is that it is flexible, and they have the option of extending the contract up to one month before the end of the rental period.
If your apartment is only available for a relatively short period, the tenant does not have this option. Therefore, it makes sense not to fully exhaust the rental price for flats that are only available for a limited period of time, or to arrange it in such a way that a tenant rents the flat, while accepting a possible move.
Tips for landlords: What should you consider?
Higher prices can of course be set when renting out holiday apartments and short-term rentals, than when renting out for a longer period of time. The target group of holiday apartments are tourists, while the target group of short-term rentals are people who may be staying in Berlin for a number of reasons that may not be work-related.
The rental of holiday apartments is no longer legal without permission, and a registration number. In the case of permanent short-term rentals, e.g., always for two months, you could run into problems with the tax office, provided that you do not charge and pay 7% sales tax in addition to the rent. In this case, you may end up with nothing left of the higher rent.
Permanent rental of a furnished apartment
Don't set the rental price too high. Keep in mind that the apartment should be rented not only once, but every month, as you can end up losing most of your money when it is empty. It therefore makes sense not to push the rental price to the limit, but to set it so that you can let all year round without any problems. It is of little use if you occasionally achieve top prices, but the apartment is then vacant for a longer period of time.
Taxes for furnished flats
Clarify with your tax advisor the tax-related aspects of your rental. Under certain circumstances, even a lower rental price may make more sense for you in terms of taxation.
Fewer inspection dates, good tenants, and longer rental period
If you want to let for your furnished apartment for set periods of time, with have good tenants over longer tenancies, you have to offer a good standard. Overpriced, cheaply furnished apartments will also find tenants from time to time. However, the tenants who rent anything and pay a lot are not necessarily ideal. As a landlord, you should be interested in thoughtful tenants, those who appreciate your housing offer, who notice that you have considered the tenant's housing needs when setting up, and have furnished your apartment with attention to detail. Such a tenant feels treated fairly, and in turn is more likely to treat your home well and leave it in good condition - a win-win situation on both sides!
How do you determine the rent for your furnished apartment in Berlin as a landlord?
First you should calculate your own costs. Here we explain this in the following steps:
Furnishing your apartment
As an example, if you have invested 24,000 € on the equipment and furnishing of your apartment for a limited period, this will theoretically cost you 200 € per month, or 2,400 € per year (inc 10% depreciation). The costs are not depreciated at once, but over 10 years (or 7 years with 30% residual value).
Electricity (40€), gas or heat (60€), water (15€), are costs that can be passed on to the tenant e.g. 50 € per month.
Internet 30 € per month.
Radio license contribution 17,50 € per month (2019).
Marketing costs for the assignment of an agency etc. can also be added.
Please note that these costs are deductible as income-tax expenses.
"Rent index" for temporary apartments
Supply and demand determines the rental price for furnished apartments. If you look at the market, compare your apartment with similarly furnished apartments of the same size, in approximately the same location. This will give you a feeling for the right price level. It is impossible to create an objective rent index for furnished apartments, however, apartments which have been furnished with attention to detail and which are attractive in the photos are more in demand, and achieve higher rents.
Tip: Start by being "price sympathetic"
Some tenants search months in advance for temporary accommodation, while others search last minute.
When starting to let your furnished apartment, you should set the price so that the apartment is rented out as quickly as possible. It's useless to have it rented for your desired price if it is only a one-off. Therefore, it is advisable to start with a price that makes for quick rental success.
While the apartment is rented, you or the agency then have the freedom to test the higher rent on the market.
Tip: Discuss the rental price with an agency
Need further help settling on a rental price? If you would like help renting a furnished apartment in Berlin on a temporary basis, contact Crocodilian via email at email@example.com, or give us a call on 030-61203458.