Is The Reliance On Long-Term Lease Agreements In Germany Built On Sand?

In recent years foreign investment in real estate in Germany has steadily increased. In 2006 about 50 billion Euros were invested in supermarkets, office buildings or other commercial property. This purchaser friendly environment is due to relatively low purchase prices as a result of the economic stagnation during past years. Further, it is also advantageous for investors that lease agreements are very often concluded for a fixed term of 10 or 15 years. The new owner steps – by force of law – into the rights and obligations as lessor. The lessee has no right to terminate the lease agreement upon a change of ownership. The security of a foreseeable long-term income is not only one of the reasons for the purchase but also an important asset when negotiating loan contracts or other means of financing.