Buying your first rental property in Germany is exciting, and the very first fork in the road is choosing between a Neubau (new build) and an Altbau (old build). Each comes with a completely different set of costs, tax rules, tenant expectations, and long-term headaches. This guide walks you through everything a first-time private landlord should weigh before signing.
Purchase price & what you actually get
New builds in Germany typically cost 30–50 % more per square metre than comparable older properties in the same area. In exchange you get modern insulation, triple-glazed windows, a fresh KfW energy rating, and zero deferred maintenance.
Older buildings are cheaper up front, but the real price hides in what comes next. A pre-war Altbau in Berlin might look like a bargain at €3 200/m², but if the roof needs replacing within five years, that’s €30 000–€60 000 you didn’t budget for.
Key question to ask yourself: Do I have cash reserves for surprise repairs, or do I need predictable costs for the first decade?
Financing & bank treatment
German banks generally view new builds more favourably:
| Factor | Neubau | Altbau |
|---|---|---|
| Loan-to-value (LTV) | Up to 90 % common | Typically capped at 80 % |
| Interest rate premium | None | +0.1–0.3 % for older stock |
| Valuation risk | Low, comparable new sales | Higher, condition-dependent |
| KfW subsidised loans | Often eligible (EH 40/55) | Only after energy retrofit |
With a new build, the bank sees a predictable asset. With an Altbau, they’ll often require a Gutachten (surveyor’s report) and may discount the valuation if the energy certificate shows class F or worse.
If you’re financing with tight equity, a new build’s higher LTV allowance can make or break the deal. Use our mortgage calculator to compare monthly payments side by side.
Tax depreciation: the landlord’s best friend
This is where things get interesting. German tax law lets you depreciate the building portion of your rental property (not the land) against your rental income.
New builds (completed after 2023):
- Degressive depreciation of 5 % per year is available under § 7 Abs. 5a EStG, introduced in 2024. This is a major incentive, you front-load your tax deductions, offsetting rental income heavily in the early years.
- Alternatively, the standard linear depreciation rate is 3 % per year (over ~33 years).
Old builds:
- Standard linear depreciation at 2 % per year (over 50 years) for buildings completed after 1924.
- For pre-1925 buildings: 2.5 % per year (over 40 years).
- If you’re buying a Denkmalschutz (listed heritage) property, you can deduct renovation costs at enhanced rates under §§ 7h/7i EStG, but the bureaucratic overhead is significant.
Practical example: You buy a Neubau apartment for €350 000. The building portion is roughly €280 000 (excluding land). With 5 % degressive depreciation, you write off €14 000 in year one, a massive reduction in taxable rental income. The same €280 000 on an Altbau at 2 % gives you just €5 600.
For a first-time landlord in a high tax bracket, the Neubau depreciation alone can shift the entire investment calculation.
Maintenance & ongoing costs
This is where Altbau investors get caught off guard.
New build advantages:
- Everything is under Gewährleistung (builder’s warranty), typically 5 years for structural defects under BGB or VOB/B.
- Modern systems (heating, plumbing, electrics) won’t need major work for 15–20 years.
- Energy-efficient building envelope means lower Nebenkosten, a real selling point for tenants.
Old build realities:
- Instandhaltungsrücklage (maintenance reserve) for WEG properties is often underfunded. Check the Hausgeld breakdown and the minutes from the last three Eigentümerversammlungen.
- Common surprise costs: roof (€20 000–€60 000), heating system replacement (€10 000–€25 000), façade renovation, balcony repairs, lead pipe replacement.
- If the building hasn’t been energy-retrofitted, you may face mandatory renovation obligations under the GEG (Building Energy Act) when you buy, especially heating system upgrades.
Rule of thumb: Budget €10–€15 per m² per year for maintenance reserves on older buildings. For new builds, €5–€7 per m² is usually sufficient for the first decade.
Nebenkosten & energy efficiency
Tenants in Germany care deeply about the zweite Miete, the “second rent” they pay via Nebenkosten. Lower operating costs make your property easier to let and justify a higher base rent.
| Cost category | Neubau (typical) | Altbau (typical) |
|---|---|---|
| Heating per m²/year | €6–€10 | €12–€22 |
| Energy certificate class | A/A+ | D–G |
| Grundsteuer | Higher (new assessment) | Lower (often legacy rates) |
| Insurance | Lower (modern systems) | Higher (older structure) |
| Water/waste | Similar | Similar |
A new build with a heat pump and solar panels can halve a tenant’s heating bill compared to an unrenovated Altbau with a 25-year-old gas boiler. That’s a tangible competitive advantage when advertising your unit.
When you’re preparing your annual Betriebskostenabrechnung, lower energy costs also mean fewer tenant disputes, nobody argues about a €60/month heating bill.
Tenant demand & rental yield
Here’s the tension: Altbau properties in prime urban locations often achieve higher gross rental yields because the purchase price is lower relative to achievable rents. A charming Altbau in Hamburg-Eimsbüttel or Cologne-Ehrenfeld will never lack tenants.
New builds in suburban or developing areas may take longer to let and attract a different tenant profile, often young families or corporate relocations.
What matters for first-time landlords:
- Vacancy risk: In A-cities (Berlin, Munich, Hamburg, Frankfurt, etc.), vacancy is essentially zero for both types. In B- and C-cities, new builds in peripheral locations can sit empty longer.
- Rent control: Many German cities have a Mietpreisbremse (rent cap). New builds completed after October 2014 are exempt, you can set the initial rent freely. This is a significant financial advantage.
- Mieterhöhung: Raising rent on an Altbau is capped at 20 % over three years (15 % in tight markets) up to the Mietspiegel. New builds start higher, so this matters less initially.
The WEG factor: don’t ignore it
Most first-time landlords buy an apartment (Eigentumswohnung), not a whole building. That means you’re part of a WEG (Wohnungseigentümergemeinschaft), the owners’ association.
In a new build WEG:
- Other owners are likely also investors or first-time buyers, aligned interests.
- The Hausverwaltung is typically the developer’s pick, check the contract term (often locked in for 3–5 years).
- Reserve fund starts from zero, build-up contributions will be set by the first Eigentümerversammlung.
In an Altbau WEG:
- Check the Instandhaltungsrücklage balance. Is it healthy (€30+ per m²) or dangerously low?
- Read the Protokolle (meeting minutes) from the last 3 years. Look for: planned special assessments (Sonderumlagen), unresolved structural issues, disputes about the Hausverwaltung.
- Beware of WEGs where owner-occupiers outnumber investors, they may vote against rent-optimising decisions.
Checklist: questions to ask before buying
For a new build:
- What is the KfW efficiency class? Am I eligible for subsidised financing?
- When is the guaranteed completion date, and what are the contractual penalties for delay?
- What is the Gewährleistung period and scope?
- Is the initial rent exempt from Mietpreisbremse?
- What is the projected Hausgeld including reserve fund contributions?
For an old build:
- What does the energy certificate show? What is the heating system and its age?
- What is the current Instandhaltungsrücklage balance?
- Are any Sonderumlagen planned or foreseeable?
- What major renovations have been done in the last 10 years (roof, façade, heating, pipes)?
- Does the GEG require any upgrades upon purchase?
- What is the achievable rent per the local Mietspiegel?
The bottom line
There is no universally better choice. The right answer depends on your financial situation, risk tolerance, and investment horizon.
Choose a new build if:
- You want predictable costs and minimal management for the first 10–15 years.
- You’re in a high tax bracket and want to maximise depreciation deductions.
- You’re financing with limited equity and need favourable bank terms.
- You want Mietpreisbremse exemption to set rents freely.
Choose an Altbau if:
- You’re targeting higher gross yield in an established urban neighbourhood.
- You have cash reserves for repairs and are comfortable managing maintenance.
- You find a well-maintained WEG with a healthy reserve fund.
- You’re buying in a prime location where tenant demand is guaranteed regardless of building age.
Whatever you choose, the key is to run the numbers honestly, including closing costs, maintenance reserves, tax effects, and realistic rent projections. Use our closing cost calculator to get the full picture before making an offer.