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3. Tenancy law
4. Fixed-Term Rental Agreements – Rules and Tenant Rights

Fixed-Term Rental Agreements – Rules and Tenant Rights

What Is a Fixed-Term Lease?

A fixed-term lease is a rental agreement with a defined duration. It ends automatically when the agreed period expires, without the need for termination. Renewal is only possible if both parties agree or a new contract is signed.

Previously, “simple fixed-term leases” allowed tenants to extend the contract by requesting it in time. This form was abolished by the 2001 tenancy law reform, although older contracts of this type remain valid.

The Qualified Fixed-Term Lease

Since September 1, 2001, landlords and tenants can only conclude a qualified fixed-term lease. This means the lease term is valid only if the landlord states a specific legal reason for the time limit in the contract (§ 575 BGB).

Valid reasons include:

• Personal use (Eigenbedarf): The landlord or a close relative plans to move in after the lease ends.
• Business use: The apartment is needed for employees or company purposes.
• Renovation or reconstruction: Major renovation or structural work makes continued rental impossible.

If the reason is missing or insufficiently specified, the agreement automatically becomes an open-ended lease.

Tenant Rights in Fixed-Term Leases

During the fixed term, ordinary termination is excluded for both landlord and tenant. Only extraordinary termination for important reasons (e.g., severe defects or payment default) is possible.

About four months before the lease ends, the tenant may ask the landlord in writing whether the reason for limitation still exists. If not, the tenant can demand the extension or conversion of the lease into an indefinite one.

It’s essential to carefully review the stated reason in the contract. If it is missing or invalid, tenants are entitled to an unlimited tenancy with full protection rights.