Germany is a capital-preservation market, not a high-yield one: gross yields sit at about 3-4% and net returns are lower. Here is where the gap comes from and which cities still make sense.
Rental yield in Germany is low by European standards: the national average gross yield was about 3.4% in the first quarter of 2026 (Global Property Guide). It varies a lot by city, from under 3% in Munich and Hamburg to a little over 4% in Berlin. After service charges, vacancy and costs that cannot be passed on to the tenant, a net return of roughly 2-3% of the total outlay is more realistic for an all-cash buyer. German property is bought mainly for stability and long-term rental demand, not for income. This guide shows where the numbers come from (as of October 2026).
Gross rental yield by city (2026)
Gross yield is the annual cold rent divided by the purchase price, before any cost. Global Property Guide's first-quarter 2026 figures, as reported in search summaries, are:
- Berlin: about 4.1%, the highest of the big cities.
- Frankfurt: about 3.5% in one source.
- Leipzig: about 3.4% for existing flats and 2.8% for new builds.
- Hamburg: about 2.9%.
- Munich: about 2.7%, the lowest of the big cities.
These are asking-price based and move with each data release. The pattern is stable, though: the more expensive the city, the lower the yield. Asking rents rose 3.0% year on year in the second quarter of 2026 (ImmoScout24 Wohnbarometer), only 0.3% after inflation. Cologne (+6.0%), Hamburg (+5.1%) and Düsseldorf (+4.1%) led; Munich rose 3.7%, Frankfurt and Leipzig 2.8%, Stuttgart 1.3%. Berlin was the only one of the eight largest cities with a fall (-0.8%).
The price multiple (Kaufpreisfaktor)
Germans usually quote the Kaufpreisfaktor: purchase price divided by annual cold rent. A factor of 25 means a gross yield of 4%. One calculator site puts typical factors at about 20.8 for a flat around EUR 150,000 and about 27.8 for one around EUR 500,000, which is a gross yield falling from roughly 4.8% to 3.6% as the price rises. A factor above 30 means that rent will take more than 30 years to repay the price, so such a purchase is a bet on price growth, not on income.
Rent regulation
New lettings in tight markets are capped by the Mietpreisbremse: the rent may be at most 10% above the local comparative rent. In June 2025 the Bundestag extended it to the end of 2029. Exceptions exist, for example for some newer buildings, so check the specific flat before you rely on a market rent. Existing tenancies can only be raised within the rules of the local rent index, which is why German rents grow steadily rather than fast. Regulation is the main reason yields stay low and stable.
What reduces the yield
- Hausgeld: the monthly fee to the owners' association, commonly EUR 3 to 4.50 per m² a month. Part of it (heating, water, caretaker) is passed on to the tenant.
- The maintenance reserve (Instandhaltungsrücklage) and the administration fee generally cannot be passed on, so they come straight out of your income.
- Property tax (Grundsteuer): paid by the owner but generally recharged to the tenant as a service charge. The 2025 reform changed the rates by municipality (see Germany property prices and buying costs).
- Vacancy and arrears: small in big cities, but one empty month costs 8% of annual rent.
- Purchase costs: roughly 9-12% on top of the price, which lowers the yield on your real outlay.
- Repairs: older blocks (Altbau) need a budget for roofs, windows and heating; our resale checklist for Germany lists the documents to ask for.
Net yield: an illustration
Our own arithmetic, not market data. A 70 m² flat in Berlin for EUR 350,000 with a gross cold rent of EUR 14,350 a year (4.1%). Purchase costs of about 11% (6% transfer tax, about 1.5% notary and registry, 3.57% broker) are about EUR 38,700, so the outlay is about EUR 388,700. Non-recoverable Hausgeld at an assumed EUR 2 per m² a month is EUR 1,680, vacancy and arrears at 3% are about EUR 430, repairs EUR 500 and a tax adviser for a non-resident return EUR 400. The costs total about EUR 3,000 and the net rent is about EUR 11,340.
- Net rent on the price: about 3.2%.
- Net rent on the full outlay: about 2.9%, before income tax and without a mortgage.
Income tax then depends on your situation (see below). The point of the example is the gap: 4.1% on the advert, a little under 3% in your pocket before tax.
Tax for a non-resident landlord
A non-resident who rents out a German property is subject to limited tax liability: the income is taxed in Germany and a return must be filed. The basic allowance that residents enjoy does not apply, and special deductions are generally excluded. Interest, repairs, property tax and agent fees are deductible. Depreciation (AfA) reduces taxable income: typically 2% a year of the building share, 3% for more recent buildings, and a degressive 5% for new residential construction started or contracted between 1 October 2023 and 30 September 2029. Confirm the rate with an adviser. If at least 90% of your income is German you can apply to be treated as fully taxable under section 1(3) of the Income Tax Act. If you later sell within ten years, the gain is taxable: see capital gains tax on a property sale in Germany.
Which cities for which goal
- Income: Berlin and the cities of the east and west such as Leipzig, Cologne or Düsseldorf offer higher yields than Munich or Hamburg, with the usual trade-offs in tenant mix and rent rules.
- Capital preservation: Munich, Hamburg and Frankfurt have the deepest demand but the lowest yield. The best areas to buy in Germany go through neighbourhoods.
- Holiday lets: regulated city by city; read short-term rental rules in Germany before counting on them.
- Risks specific to German landlords are in Germany property investment risks. New build versus resale is covered in Germany new build vs resale.
FAQ
What is a good rental yield in Germany? A gross yield of 4% or more is above average for a big city; 3% is common in Munich and Hamburg. What counts is the net figure on your full outlay. Can a foreigner buy to let in Germany? Yes: there are no nationality restrictions, but a non-resident mortgage is harder, see mortgages for foreigners in Germany. Is the Mietpreisbremse permanent? It runs until the end of 2029 under the current law. Is Germany a good market for income? It is a good market for stability; for income, other markets usually pay more, which our country property guide and the page /countries/germany put in context.
How we help
We shortlist cities and buildings to your goal (income or preservation), model gross and net yield on your real outlay including purchase costs and non-recoverable fees, and coordinate local lawyers, notaries and tax advisers. We do not promise returns.
This article is informational only and is not legal, tax or investment advice. Figures are indicative, come from public sources as of October 2026 and change; confirm the current rules with a German adviser before you buy.