Property Glossary Dresden

The maintenance reserve (Instandhaltungsrücklage, also Erhaltungsrücklage) is a fund saved up by the homeowners' association (WEG) for future repairs and renovations of the common property — for example the roof, façade or lift. When buying a condominium, the previous owner's share of the reserve passes to the buyer. A well-funded reserve protects against special levies. The current balance is shown in the latest budget plan (Wirtschaftsplan) and the annual statement.

The land register (Grundbuch) is the official register of all plots and properties in Germany. A land register extract contains information about the owner, the size of the plot, and registered rights and encumbrances such as mortgages or rights of way. When selling a property, a current extract must be presented — usually no older than three months. It can be requested from the responsible land registry office (Grundbuchamt) or online.

The energy certificate (Energieausweis) documents a property's energy consumption or demand and has been legally required for sales and new lettings since 2014. There are two types: the consumption certificate (Verbrauchsausweis, based on actual consumption over the last three years) and the demand certificate (Bedarfsausweis, based on a technical analysis of the building). The energy efficiency classes range from A+ to H. Failing to present one risks fines of up to 15,000 euros.

The cadastral map (Flurkarte, also Liegenschaftskarte or Katasterkarte) is an official map showing the exact location, shape and size of a plot in relation to neighbouring plots and streets. It is needed for the sale and at the notary appointment and can be requested from the land survey office (Vermessungsamt) or via the geodata portal of the respective federal state.

The building permit (Baugenehmigung) is the official decision authorising the construction or substantial alteration of a building. When selling, all relevant building permits should be presented — including those for later extensions, loft conversions or garages. If permits are missing for existing structures, this can lead to considerable problems and liability risks. The buyer then also assumes all legal consequences.

The declaration of division (Teilungserklärung) is the foundational document of a homeowners' association (WEG). It defines which parts of the building are individual ownership (Sondereigentum, of the individual owners) and which are common property (Gemeinschaftseigentum, of all owners together). It also regulates the voting rights and the cost allocation formula. When buying a condominium, the declaration of division is one of the most important documents to review before signing.

The WEG-Protokoll is the minutes of the annual owners' meeting of a homeowners' association. It documents resolutions on maintenance measures, special levies, changes of property manager and other important decisions. Buyers should read the minutes of the last three years to identify planned renovations or existing conflicts within the association.

The living area decisively determines a property's value. Under the Living Area Ordinance (WoFlV), balconies and terraces count for only 25 %, while cellars and boiler rooms do not count at all. Errors in the stated living area can lead to claims after the sale — which is why a professional recalculation is advisable where the basis is unclear. A deviation of more than 10 % can become legally relevant.

The register of building encumbrances (Baulastenverzeichnis) is a public register kept by the building authorities that records public-law obligations attached to plots — for example setback areas, rights of way for neighbours or parking-space obligations. Unlike private-law easements (Grunddienstbarkeiten), building encumbrances (Baulasten) are not recorded in the land register. When buying, the register of building encumbrances should always be inspected as well.

The contaminated-site information (Altlastenauskunft) reveals whether a plot is listed in the municipality's register of contaminated sites (Altlastenkataster). Altlasten are soil contaminations caused by former industrial or commercial use. Remediating contaminated sites can be extremely costly and is generally the responsibility of the new owner. This information is especially important for plots in commercial locations or former industrial areas.

The floor plan (Grundriss) shows the horizontal top-down view of a property with the room layout, doors, windows and wall thicknesses. It is a central marketing document — professionally prepared floor plans demonstrably increase the enquiry rate on online listings. If original plans are missing, they can be redrawn by the municipality's building-law office (Baurechtsamt) or by an architect.

The house allowance (Hausgeld) is the monthly amount that condominium owners pay to the property management. It covers the running costs of the common property: administration costs, insurance, cleaning, garden maintenance and the contribution to the maintenance reserve. The non-apportionable part of the house allowance (e.g. reserve, administration) is borne by the owner and cannot be passed on to tenants in the yield calculation.

The speculation tax (Spekulationssteuer; officially income tax on private capital gains) is due when a property is sold at a profit within ten years of purchase. Exception: the property was owner-occupied in the year of sale and the two preceding years. The tax is calculated on the gain (sale price minus purchase price minus costs) at the personal income tax rate. After a holding period of ten years it ceases to apply entirely.

The real estate transfer tax (Grunderwerbsteuer) is due on the purchase of a property and ranges, depending on the federal state, between 3.5 % (Bavaria, Saxony) and 6.5 % (Thuringia, NRW, Schleswig-Holstein). In Saxony — and therefore in Dresden — the favourable rate of 3.5 % applies. It is calculated on the purchase price and is paid by the buyer. Without proof of payment, the tax office does not issue the clearance certificate (Unbedenklichkeitsbescheinigung) required for the change of ownership in the land register.

The agent's commission (Maklercourtage) is the estate agent's fee. Since the ordering-party principle (Bestellerprinzip, 2020) for residential property, the rule is: whoever engages the agent pays at least half. The commission is usually split between buyer and seller. In Saxony the usual total commission is 7.14 % (incl. VAT) of the purchase price, i.e. 3.57 % each for buyer and seller. Different rules apply to commercial property — here the commission is freely negotiable.

The notary fees (Notarkosten) for a property sale are governed by law through the Court and Notary Costs Act (GNotKG) and are based on the purchase price. They cover the notarisation of the purchase contract, the priority notice (Auflassungsvormerkung) and the change of ownership in the land register. As a rule they amount to about 1.5 % to 2 % of the purchase price. Notary fees are usually borne by the buyer.

The property tax (Grundsteuer) is an annual tax that owners of land and buildings pay to the municipality. It is calculated on the basis of the assessed value (Einheitswert; from 2025 the new Grundsteuerwert) multiplied by the tax base figure (Steuermessbetrag) and the municipal multiplier (Hebesatz). In Dresden the multiplier is 655 % (as of 2026). Grundsteuer B applies to developed and developable plots — Grundsteuer A applies to agricultural and forestry land.

Anyone who inherits a property may have to pay inheritance tax (Erbschaftssteuer). The tax depends on the value of the estate and the degree of kinship. Children have an allowance of 400,000 euros, spouses of 500,000 euros. Owner-occupied properties are tax-free under certain conditions (10 years of personal use). Specialist tax advisors can considerably reduce the tax burden through targeted structuring.

Owners of listed properties can depreciate renovation costs on particularly favourable terms: as owner-occupiers 90 % over 10 years, as landlords 100 % over 12 years (§ 7i EStG). This listed-building depreciation makes heritage properties highly attractive for high-income investors. Dresden, with its rich stock of listed buildings, offers an especially large number of such properties.

Under § 6b EStG, gains from the sale of business-owned property can be transferred tax-free into a reserve and reinvested in new properties within four years. This rule makes it possible to reallocate capital gains in a tax-neutral way. It applies only to business assets, not to privately held property.

Landlords can depreciate the acquisition costs of a property for tax purposes (AfA = Absetzung für Abnutzung, deduction for wear and tear). For residential buildings, straight-line depreciation of 2 % per year over 50 years generally applies. New builds from 2023 can be depreciated at 3 %. The land value is not depreciable. The AfA reduces the taxable rental income each year and thus lowers the tax burden.

The purchase price multiplier (Kaufpreisfaktor, also called Vervielfältiger) indicates how many years' net rent a property costs. It is calculated as: purchase price ÷ annual net cold rent. A factor of 20 means you pay 20 annual rents. The higher the factor, the lower the yield. In Dresden, factors for apartment buildings range between 14 and 30 depending on location. It is the central comparison metric for investors.

The standard land value (Bodenrichtwert) is the officially determined average value for building land in a given location — stated in euros per square metre of plot area. It is set by expert committees (Gutachterausschüsse) and updated every two years. It serves as a reference value for land transactions and is the basis for many tax valuations. In Dresden it ranges between under €100/sqm in peripheral locations and over €1,000/sqm in the best inner-city locations.

The market value (Verkehrswert, per § 194 BauGB) is the price that would be achieved for a property in the ordinary course of business — independent of unusual circumstances or personal relationships. It corresponds to the realistic market price and is determined by certified surveyors using the income approach, cost approach or comparison approach. Banks, courts and tax offices use the market value as a basis for calculation.

The income approach (Ertragswertverfahren) is mainly used for yield-oriented properties (apartment buildings, commercial). It derives the value from the sustainably achievable rental income less operating costs, capitalised with a property interest rate (Liegenschaftszinssatz). The land value is determined separately and added. It is less suitable for owner-occupied homes.

The cost approach (Sachwertverfahren) calculates a property's value from the land value plus the value of the structures (construction cost less depreciation). It is used above all for owner-occupied properties for which few comparable objects exist — for example unusual detached houses on large plots. The cost value (Sachwert) determined often does not correspond directly to the market value.

The comparison approach (Vergleichswertverfahren) determines a property's value by comparison with actually achieved purchase prices of similar objects. It is the most direct and market-oriented method and is used especially for condominiums and standardised terraced houses. Expert committees regularly publish comparison prices (purchase price collections, Kaufpreissammlungen) that serve as a basis.

The living area (Wohnfläche) covers only the areas used for living — under the WoFlV, balconies count for 25 %, while cellars and utility rooms do not count at all. The usable area (Nutzfläche, per DIN 277) is broader and also includes cellars, garages and utility spaces. In property sales the living area is almost always stated. Confusion leads to disputes — which is why the calculation method should be named in the purchase contract.

The gross rental yield is calculated as annual net cold rent ÷ purchase price × 100. It gives the percentage yield before costs. The net rental yield additionally accounts for operating costs (management, maintenance, vacancy) and is typically 1–2 percentage points below the gross rental yield. As a rule of thumb: a gross rental yield below 3 % is hard to justify for pure yield investors.

The vacancy rate (Leerstandsquote) indicates the share of unrented units in the total stock. It is an important indicator of lettability and thus the profitability of an investment. In sought-after locations such as Dresden-Neustadt the vacancy rate is often below 1 %, while in peripheral locations it can be considerably higher. When buying an apartment building with vacancies, it should be checked whether these are structural or market-related.

The rent multiplier (Mietmultiplikator) is the reciprocal of the gross rental yield and equals the purchase price multiplier: purchase price ÷ annual net rent. A multiplier of 25 corresponds to a gross rental yield of 4 %. It is often used as a quick metric to compare property offers. Both terms are frequently used interchangeably.

Home staging refers to the deliberate, professional preparation of a property before sale or letting — with the aim of creating a positive first impression and maximising the achievable price. It is not about renovation but about presentation: decluttering, depersonalising, neutral furnishing, targeted lighting and decoration. Professional home staging in Dresden typically costs €1,500–4,500 and is worthwhile above all for vacant properties, large objects and stalled sales.

In property sales, the statutory liability for material defects is regularly excluded in the purchase contract — 'bought as seen'. The seller is then generally not liable for hidden defects discovered after handover. Exception: defects fraudulently concealed. The exclusion protects the seller but means heightened diligence for the buyer at the viewing — in case of doubt with a building surveyor.

The land charge (Grundschuld) is the most common security instrument for property loans in Germany. The financing bank has a land charge registered in the land register (Section III) in the amount of the loan. Unlike a mortgage (Hypothek), the land charge is not tied to the specific claim and remains in place even after full repayment — it must then be actively deleted or assigned to a new bank.

Anyone who buys a let property and wishes to occupy it themselves can terminate the tenant's lease for personal use (Eigenbedarf). The notice periods are 3, 6 or 9 months depending on the length of tenancy (§ 573c BGB). Personal use must be seriously and permanently intended — feigned personal use makes one liable for damages. In some cities and for conversions into condominiums, stricter protection rules apply.

The handover protocol (Übergabeprotokoll) is drawn up jointly by seller and buyer at the key handover. It documents the condition of the property at the time of handover: meter readings (electricity, gas, water), available keys, known defects and outstanding works. The protocol protects both sides — in the event of a dispute it is the central evidentiary document for the property's condition at handover.

The property purchase contract must be notarised (§ 311b BGB) and contains all essential agreements: purchase price, object of sale, handover date, warranty exclusions and financing terms. The notary drafts the contract on the basis of both parties' agreements. Both parties receive the draft at least two weeks before the notarisation appointment — enough time to review it.

The priority notice of conveyance (Auflassungsvormerkung) protects the buyer as soon as the purchase contract has been notarised. It is registered in the land register and prevents the seller from selling or encumbering the property again before ownership has been transferred. Only after full payment of the purchase price and presentation of the tax office's clearance certificate (Unbedenklichkeitsbescheinigung) is the priority notice replaced by the final change of ownership.

With a heritable building right (Erbbaurecht), the buyer does not acquire the plot itself but the right to build and live on it — for a fixed term (usually 50–99 years). For this right they pay an annual ground rent (Erbbauzins) to the landowner (often a church, municipality or foundation). On expiry the building reverts to the landowner. Properties with a heritable building right are harder to finance and to sell.

Usufruct (Nießbrauch) is a real right that allows a person to use another's property and draw its income (e.g. rental income) — even though they are not the owner. It is registered in the land register and survives a sale. It is often used for gifts within the family: the parents transfer ownership to the children but retain the usufruct and can continue to live in the property or collect rent.

The right of residence (Wohnrecht) is a limited personal right that allows a person to occupy a property or parts of it — without holding ownership rights. Unlike usufruct, it does not entitle the holder to let the property. It is registered in the land register and expires on the death of the entitled person. Rights of residence are often agreed in the context of gifts or inheritances to secure a lifelong place to live for family members.

The right of first refusal (Vorkaufsrecht) gives a specific person or institution the right to buy a property on the same terms as a third party. Municipalities have statutory rights of first refusal in certain areas (e.g. conservation-statute areas). Tenants too have a right of first refusal under certain conditions when rental flats are converted into condominiums. The right of first refusal must be exercised within a deadline (usually 2 months).

With a sole agency agreement (Makleralleinauftrag), the owner exclusively engages a single agent for the sale. In return the agent commits to active marketing. There is the simple sole mandate (einfacher Alleinauftrag, the owner may not sell themselves) and the qualified sole mandate (qualifizierter Alleinauftrag, the owner may not sell themselves either). A sole mandate is generally more effective than engaging several agents at once, as it gives the agent the certainty to justify their full commitment.

Notarisation (notarielle Beurkundung) is mandatory in Germany for all land purchase contracts. The notary is a neutral public official — they represent neither party but safeguard the legal certainty of the contract. They read out the contract, clarify open questions, verify the identity of both parties and certify the conclusion. Without notarisation a property purchase contract is void.

A reservation agreement (Reservierungsvertrag) holds a property for a potential buyer while they arrange financing or carry out checks — usually for a reservation fee of 1–2 % of the purchase price. Important: reservation agreements are legally contested in Germany. The Federal Court of Justice (BGH) has ruled that a reservation fee often may not be validly retained if no notarised purchase contract is concluded. They are in no way a substitute for the notarised purchase contract.

The rent increase cap (Kappungsgrenze) limits how much a landlord may raise the rent within 3 years (§ 558 Abs. 3 BGB). Nationwide a ceiling of 20 % over 3 years applies. In Saxony — and therefore in Dresden — the state has made use of the option to lower this to 15 % (Saxon Rent Cap Ordinance, Sächsische Kappungsgrenzenverordnung). The basis of calculation is the net cold rent paid exactly 3 years ago. Even if the rent index allows a higher rent, the rent increase cap is the absolute ceiling.

The rent index (Mietspiegel) is an overview of the local comparative rents, published by municipalities or interest associations. It serves as a legally recognised basis for justifying rent increases (§ 558a BGB). Qualified rent indices (§ 558d BGB) are produced according to scientific principles and have particular evidentiary weight in court. The Dresden rent index 2025 applies from January 2025 to December 2026 and is based on four parameters: living area, year of construction, fittings and location of the flat.

Rent control (Mietpreisbremse, § 556d BGB) limits the initial rent for new lettings: it may be at most 10 % above the local rent index comparative value. It applies in areas with a tight housing market, designated by the federal states by ordinance — in Dresden currently until 30 June 2027. Crucially: rent control applies exclusively to new lettings, not to increases in ongoing tenancies. For existing tenants, the rent index and the rent increase cap apply.

With a stepped-rent lease (Staffelmietvertrag, § 557a BGB), future rent increases are fixed at the time the contract is concluded — as specific euro amounts for precisely named dates. Additional increases under § 558 BGB (on the basis of the rent index) are excluded during the term of the steps. Each step must apply for at least one year. For landlords this contract form offers planning certainty and less justification effort; for tenants the cost development is transparent from the outset.

The index-linked lease (Indexmietvertrag, § 557b BGB) ties the rent to the consumer price index (VPI) of the Federal Statistical Office. If the VPI rises, the landlord can increase the rent by the same percentage — without rent-index justification. The rent increase cap (15 % in Dresden) does not apply to the index-linked lease. With high inflation the increases can become considerable for tenants. If the VPI falls, the tenant is theoretically entitled to a reduction. In Germany, index-linked leases are used more often in the commercial sector, but are also gaining importance for residential space.

A condominium (Eigentumswohnung) is a flat held as individual ownership (Sondereigentum) by a buyer within an apartment building. The owner is a member of the homeowners' association (WEG) and bears proportionate responsibility for the common property (roof, façade, stairwell). Condominiums are the most frequently transacted properties in Dresden — especially in locations close to the city centre.

A detached house (Einfamilienhaus) is a free-standing building used exclusively by a single family. It comprises the dwelling, cellar, and often a garden and garage. Detached houses offer maximum privacy and design freedom but are more demanding in upkeep and maintenance than flats. In Dresden, free-standing detached houses are found above all in the outer districts such as Klotzsche, Bühlau or Hellerau.

An apartment building (Mehrfamilienhaus) contains three or more residential units owned by a single owner — no WEG structure. Apartment buildings are held primarily as an investment and valued using the income approach. In Dresden, Gründerzeit apartment buildings with 6–20 units are the typical asset class for institutional and private investors.

A semi-detached house (Doppelhaus) consists of two mirror-image halves built against each other, each belonging to a separate owner. The plots are generally physically divided. Semi-detached halves are cheaper than free-standing detached houses but offer similar living quality. In Dresden they are frequently found in quieter residential locations such as Striesen, Tolkewitz or Bühlau.

Terraced houses (Reihenhäuser) are individual houses built in a row, each with its own plot. The corner house of a row is called a Reihenendhaus. Terraced houses are space-efficient and therefore cheaper than free-standing detached houses — but are likewise used as a complete house with a garden. In Dresden they are common above all in the districts built between the 1920s and 1950s.

A listed property (Denkmalimmobilie) is under heritage protection and may only be altered with the approval of the heritage authority. In return, listed objects offer considerable tax advantages (listed-building depreciation, Denkmal-AfA). Owing to its rich architectural history, Dresden has an above-average share of listed properties — from Gründerzeit buildings and Art Nouveau villas to industrial monuments.

A heritable-building-right plot (Erbbaugrundstück) is a plot encumbered by a heritable building right (Erbbaurecht). The landowner leases it long-term to the holder of the building right, who builds and lives on it. Such plots are complex when determining a sale price — their value depends on the remaining term and the level of the ground rent (Erbbauzins). In Dresden many plots belong to the church or the city, which grant them as heritable building rights.

Commercial properties (Gewerbeimmobilien) include offices, retail space, warehouses, hotels and production facilities. They are valued by different criteria than residential property — location for retail, infrastructure for logistics, and third-party usability are decisive. Commercial rents are not governed by social tenant protection — contracts are individually negotiable.

A mixed residential and commercial building (Wohn- und Geschäftshaus) combines flats with commercially used space — usually shops or offices on the ground floor and flats on the upper floors. Valuation is complex, as two types of use with different risk profiles come together. Such buildings are especially common along Dresden's main thoroughfares (e.g. Bautzner Straße, Königsbrücker Straße).

The annuity loan (Annuitätendarlehen) is the standard form of property financing in Germany. The borrower pays a constant monthly instalment (annuity) made up of an interest portion and a repayment portion. As the remaining debt decreases with each instalment, the repayment portion automatically increases — while the total instalment stays the same. Initial repayment rates of 1–3 % with fixed-interest periods of 10–20 years are usual.

The mortgage lending value (Beleihungswert) is the sustainable value of a property determined by the bank — generally 70–80 % of the market value. Banks usually finance up to 80 % of the mortgage lending value without a risk premium. If the purchase price is significantly above the mortgage lending value, the bank requires more equity or accepts higher interest rates. It is set more conservatively than the current market value.

The fixed-interest period (Zinsbindung, Sollzinsbindung) is the period for which an agreed interest rate is guaranteed — typically 5, 10, 15 or 20 years. After the fixed-interest period ends, the remaining debt must be refinanced at the then-current interest rate (follow-up financing, Anschlussfinanzierung). Long fixed-interest periods provide planning certainty but usually carry a premium over short terms.

The repayment (Tilgung) is the portion of the monthly loan instalment that actually reduces the remaining debt. Initial repayment rates of 2–3 % are advisable — at a 1 % repayment rate, full debt clearance takes 40+ years depending on the interest level. A special repayment (Sondertilgung) allows additional amounts to be repaid outside the schedule and thus save interest; in most loan contracts 5–10 % of the original loan per year is possible free of charge.

Equity (Eigenkapital) is the part of the purchase price that the buyer contributes from their own funds — i.e. without a bank loan. As a rule of thumb: at least 20 % of the purchase price plus the ancillary purchase costs (about 5–10 %) should come from equity. Those who contribute more equity receive lower interest rates and better terms. In Saxony the ancillary purchase costs are comparatively low, with 3.5 % real estate transfer tax.

The KfW (Kreditanstalt für Wiederaufbau, the German state development bank) offers low-interest loans and repayment grants for energy-related renovations and new builds. The most relevant for a property purchase is the KfW programme 261 (federal funding for efficient buildings) — depending on the efficiency-house standard, repayment grants of up to 45 % are possible. KfW funds must be applied for before construction begins or before the purchase contract is concluded.

Commitment interest (Bereitstellungszinsen) is a cost that banks charge when a committed loan is not drawn down immediately — typically 0.25 % per month after a commitment-free period of 3–12 months. For new-build projects or renovations that are delayed, it can become considerable. When buying an existing property it is usually not an issue, as the loan is drawn down at the notary appointment.