Mietkauf
Rent-to-Own. A rent-to-own structure: the occupier rents first and part of the rent is credited against a later purchase price. German practice splits it in two, a classic Mietkauf that obliges the occupier to buy and an Optionskauf that only grants the right to buy.
Both variants need a notary. § 311b Abs. 1 BGB requires notarial form for any contract obliging a party to transfer or acquire ownership of land, and a contract closed without that form becomes valid only once conveyance and land registry entry have taken place. The monthly payment splits in two: one part is rent the seller keeps, the other is credited against the purchase price. Only the credited part reduces what is still owed. Dr. Klein puts typical terms at 10 to 20 years, up to 30 for an Optionskauf, with rents running up to 50% above the local market rate.
Transfer tax does not wait for the handover. Under § 1 Abs. 1 Nr. 1 GrEStG the taxable event is the contract creating the claim to transfer, not the land registry entry, so a classic Mietkauf with a binding purchase obligation triggers the tax at notarisation, years before the occupier owns anything. For an Optionskauf, § 14 Nr. 1 GrEStG places the tax at the moment the condition occurs, meaning when the option is exercised. § 1 Abs. 2 GrEStG separately catches arrangements that let someone exploit a property for their own account without any claim to transfer at all.
Until conveyance and entry in the land register the occupier is not the owner. The property stays in the seller's estate and stays exposed to the seller's creditors and insolvency, which is precisely what an Auflassungsvormerkung exists to secure against. Where the occupier stops paying, these contracts commonly provide that the amounts already paid are forfeited.
Frequently asked questions
What is Mietkauf in Germany?
A rent-to-own arrangement: the occupier rents the property and part of the rent is credited against a later purchase price. A classic Mietkauf obliges the occupier to buy, while an Optionskauf grants only a right to buy, exercised by a set deadline.
Does a rent-to-own contract need a notary in Germany?
Yes. § 311b Abs. 1 BGB requires notarial form for any contract obliging a party to transfer or acquire ownership of land. A contract closed without that form becomes valid only once conveyance and land registry entry have taken place.
When is property transfer tax due on a Mietkauf?
Where the purchase is binding, at notarisation. § 1 Abs. 1 Nr. 1 GrEStG attaches the tax to the contract creating the claim to transfer, not to the land registry entry. For an Optionskauf, § 14 Nr. 1 GrEStG places it at the moment the option is exercised.
Is the whole rent credited against the purchase price?
No. The payment splits into a rent portion the seller keeps and a purchase portion that is credited. Only the credited portion reduces the balance owed, and Dr. Klein reports total rents in these deals running up to 50% above the local market rate.
Who owns the property during the rent-to-own period?
The seller. Ownership passes only on conveyance and entry in the land register. Until then the property remains exposed to the seller's creditors and insolvency, which is what an Auflassungsvormerkung is registered to secure against.
What happens if the buyer cannot keep paying?
These contracts commonly provide that amounts already paid are forfeited, and the seller may claim damages on top. Because ownership has not passed, the property stays with the seller.
Can foreigners use Mietkauf to buy German property without a mortgage?
The structure replaces the bank with the seller, so there is no bank credit assessment. In exchange the buyer carries the seller's insolvency risk, typically pays above-market rent, and owes transfer tax from the notarisation date rather than at handover.