Munich fines owners for vacant housing: penalties reach €230,000

Photo: Bild

Owners of four houses and apartments in Munich have been fined a total of €230,000, Bild reports. The city considers prolonged vacancy a violation of housing-use regulations, as Munich continues to experience an acute shortage of affordable accommodation. The administration stresses that the measures aim to reduce the share of unused properties and bring them back onto the market.

Penalties for prolonged vacancy

In Munich, leaving a residential property vacant for more than three months without valid justification is prohibited. According to the city’s social department, vacancy is only permissible if the unit is being prepared for sale, undergoing renovation, or involved in inheritance proceedings — none of which were confirmed in these cases. Munich’s Deputy Mayor Verena Dietl emphasized that every housing unit is vital for a city where demand for affordable living continues to grow. She noted that the administration is systematically returning vacant units to the market to expand supply. Heavy fines, she added, demonstrate that the city does not intend to tolerate violations.

The official website of the Munich city administration states that violations related to housing use — including unlawful vacancy exceeding three months — carry penalties of up to €100,000. This ceiling applies specifically to subsidized apartments, where occupancy requirements are particularly strict. The actual fine amount depends on the severity and duration of the violation: after inspection, owner notification and review of submitted documents, Sozialreferat determines the size of the penalty. For private homes and multi-unit residential buildings, sanctions may significantly exceed the base threshold.

Ban on improper use of residential property

Munich has enforced rules against improper housing use (Zweckentfremdung) since 1972, with regular updates. Beyond vacancy, violations include converting residential space into offices, commercial use and short-term rentals (Ferienwohnung). City Hall refers to Article 5 of the Act and Section 14 of the municipal statute, which state that using residential property for non-residential purposes without proper authorization constitutes an offense. In such cases, fines may reach as high as €500,000.

To obtain an exemption, owners must submit an application, a floor plan, a land registry extract and other documents. Partial commercial use is allowed, provided that the residential proportion remains dominant. The administration also encourages residents to report suspected vacant or improperly used housing. A special reporting form is available on the municipality’s website.

Enforcement practices

According to Süddeutsche Zeitung, in 2024 authorities returned 448 properties to the market that had previously been vacant or improperly used, including illegal short-term rentals. A significant share of violations involved converting apartments into tourist accommodation, especially in central districts. Current rules allow full-unit short-term rental for no more than eight weeks per year, and exceeding this limit constitutes a violation.

Authorities note that demand for short-term rentals remains high, encouraging some owners to circumvent regulations. A key enforcement tool has become the growing number of citizen reports concerning suspicious use of neighboring units. However, investigations are often complex: authorities must confirm actual rental duration and establish the link between the owner and posted listings. Additional complications stem from recent court rulings that tightened evidentiary requirements and made it more difficult to hold owners accountable. Despite these challenges, the city intends to strengthen oversight and return as many units as possible to the housing stock.

Low returns and rising risks

For investors, the German real estate market presents considerable challenges. Munich displays very low rental yields — just 2.69% gross, according to Global Property Guide and immobilienscout24.de. After taxes, maintenance and utilities, yields typically decrease by several additional percentage points. Net returns often fall below 1%, and in case of vacancy an owner risks not only losing revenue but also generating a negative result.

Across Germany, gross yields remain modest — about 3.51%, with real yields at 1.51%. Stuttgart performs slightly better at 4.67% (2.67% net), Leipzig at 4.14% (2.14%), and Berlin at 4.13% (3.13%). Frankfurt stands at 3.06% (2%), while Hamburg shows 2.72% (0.72% net).

Analysts at International Investment note that the combination of low net yields and an increasingly complex regulatory framework significantly shapes investor behavior in the German real estate market. Even short periods of vacancy can reduce returns to zero or push investments into loss territory due to high operating expenses. An additional risk comes from the possibility of heavy fines for violating housing-use rules, with penalties reaching levels that may exceed an entire year’s income from the property.

Under these conditions, investors must account for structural risks associated with property ownership and evaluate not only potential value appreciation but also the sustainability of an operating model within existing regulations. The German market remains stable and liquid, yet its attractiveness depends heavily on an owner’s ability to comply strictly with regulatory requirements and minimize operational downtime.