The general cost of living in Germany is rising. Unfortunately, this does not exclude rents and ancillary rental costs. Due to the short supply of housing, rent increases are the order of the day. In contrast to social housing, landlords of privately financed flats are allowed to raise the rent during the course of the tenancy, for example to the local comparative rent. However, there are limits here too, as no landlord is allowed to set their own rules at will or arbitrarily. Instead, they must adhere to many criteria laid down in the law, even for authorised increases. In Germany in particular, the conditions for increasing the rent are strict. What you as a landlord must observe or accept as a tenant and what you must not is explained below. When people talk about a rent increase in everyday life, they usually mean an increase to the local comparative rent in accordance with Section 558 BGB. However, from a purely legal point of view, a "rent increase" is more than this. This is because an increase in rent following modernisation measures and an increase in advance payments for heating and operating costs also constitute an increase in rent within the meaning of the law.
What is the cap and who does it protect?
The housing market is becoming increasingly tight, meaning that landlords often only realise quite late that the rent they are charging is far below what other landlords usually charge in the city. Depending on when the landlord realises the difference, the adjustment to the local comparative rent can then mean a rapid surcharge for tenants and thus possibly a sudden overcharge. To avoid this, the legislator has set a maximum percentage of 20 per cent. As a result of the regulation on rent caps that came into force on 1 June 2014 (the so-called rent cap regulation), an upper limit (20 percent) for the rent increase was set by law. In most larger cities such as Cologne, Berlin, Hamburg and Munich, however, a special regulation applies. There, the rent may only be increased by a maximum of 15 per cent within three years, Section 558 (3) BGB.
The cap is intended to protect the tenant. For example, a tenant has been paying EUR 6.00 rent per square metre for several years. However, the standard local comparative rent is currently already EUR 8.50 per square metre. Thanks to the rent cap, the landlord may demand a maximum increase of 20 per cent of the EUR 6.00 rent per sqm (i.e. a maximum of EUR 1.20), even though the local comparative rent has not yet been reached despite the increase.
What is the rent index and can you increase a rent without a rent index?
Regular surveys of landlords in cities and municipalities are currently used to determine the rent index. The flats are categorised according to their amenities and location. This qualified rent index, which is recognised by all parties involved (tenants, landlords and municipal representatives), must be recalculated every two years. On the basis of this, the landlord can set the rent for his rental property in line with local comparative rents and therefore also increase it. Due to the rent cap, however, the increases may deviate upwards by a maximum of 20 per cent (or 15 per cent in the case of special regulations) from this comparative rent if the rental property has certain features that are not included in the rent index. At this point, attention must again be paid to the justification, as this must be explained in a comprehensible manner and only on the basis of the rent index for the specified municipality. It is not permissible to justify an increase in rent using the rent index of the neighbouring municipality. A rent index also provides a more precise view of the average ancillary costs in the respective municipality. To summarise, it can be said that it represents a generally accepted framework within which the landlord's demands may move.
When and how often is the landlord allowed to increase the rent?
If there is no rent index in your own municipality, the landlord can justify the rent increase in accordance with Section 558a of the German Civil Code (BGB), for example, with rents for at least three comparable flats. These comparable flats do not have to be identical, but merely comparable. The location, size and furnishings are taken into account. It is important that the landlord lists these comparable flats in the letter with the address/floor, i.e. specifies the comparable flats precisely enough. This is important because it is the only way to ensure that a calculation can be checked accurately. If the comparative flats are inappropriate, the landlord's calculation is invalid and the tenant can lodge an objection to the announcement of the rent increase.
Another option instead of using the comparative flats is an expert opinion or information from a rent database to justify an increase in rent, which may be used just as well. However, if a qualified rent index exists, the information from this must always be included in the justification. As a landlord, you should therefore inform yourself well before drafting a letter. If, in the end, the landlord has made his calculations correctly, he has the option of even raising the rent above the rent index on the basis of the comparative flats.
Unfortunately, the rent index cannot be used to reduce the rent, but it can be used to prevent an increase in the rent. However, this would have to be a rental agreement in which the landlord has set a rent that is at least 20 per cent above the local comparative rent.
What form/justification must the landlord choose for a rent increase?
One of the most important points regarding the form of the rent increase is that the announcement is made in writing. Otherwise, the landlord can object and delay everything. It is crucial that the landlord hands over the increase to the tenant either by letter, fax or in person. This announcement must be made by all landlords. This point is important if there is a community of landlords or if a married couple act as joint landlords. An announcement by a single person is ineffective in such cases.
Furthermore, it must be explained what is meant by the customary local comparative rent. The increase must be as precise as possible. The landlord has a number of options to choose from when justifying the increase. For example, reference to the rent index, a list of comparable flats (at least three!), an expert's report or information from a rent database.
The rent increase due to modernisation is a special case, meaning that the landlord may allow the tenant to participate in the proportionate modernisation measures up to 11 percent per year. It should be noted here that the measures and the corresponding costs must be listed in detail.
If modernisation measures are involved, the landlord must provide the tenant with a fairly precise overview of the upcoming work. This includes information on the type and scope of the work, the start date and the expected duration. In addition, the total costs must be stated and the costs itemised.
What happens if the form of the rent increase notice is not adhered to?
As can be seen above, a short email or a small note in the tenant's letterbox is not enough to justify the rent increase. Regardless of whether the rent increase is objectively justified, it is important to use the correct wording. If the landlord makes a formal error in his request for a rent increase, which must be made in writing, it may not be legally effective. As a result, the rent increase may only take effect later or not at all. Particularly in the case of rent increases due to modernisation, it is important to provide a comprehensible justification. This is because if the landlord has not announced a modernisation correctly or at all, the deadline for the rent increase is extended from three to six months. In the past, case law has been relatively strict in such cases, so caution is absolutely necessary here.
The most important facts about a rent increase:
-
-
- Rents may only be increased every 15 months and may not be increased by more than 20/15 per cent in three years (rent cap).
- The rent increase letter must include the correct form of address for all tenants concerned, the date, the date from which the new rent applies and the exact new rent amount.
- The subject line must directly state what it is about and which flat is meant.
- A comprehensible and precise justification is essential. Prove that the current rent per square metre no longer corresponds to the usual rent paid for comparable flats in the municipality.
- The status of the municipal rent index must always be the most up-to-date.
- A deadline for when the rent increase will take place (the rent may only be increased at the beginning of the third calendar month!)
- A declaration of consent ("rent increase up to the standard local comparative rent") should not be forgotten as a request for the tenant's consent. It should also be made clear that silence will be interpreted as a refusal.
- In the case of modernisation measures, the letter should also include a reference to Section 555d BGB. This regulates when the tenant must tolerate modernisation work.
- In the case of graduated and index-linked rents, it is not possible to increase the rent retrospectively.
-
In addition to increasing the rent up to the standard local comparative rent, there is also a second option: adjusting the advance payments for heating and operating costs. This adjustment can be declared in accordance with Section 560 (4) BGB in response to a statement of operating costs.
If you have problems, you can always call in a lawyer. It often happens that the tenant does not reply to the letter. It is also possible that the landlord will resort to legally unauthorised increases. In such individual cases, it is better to seek advice before unpleasant situations arise.
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
If you need legal advice, please feel free to call us at 0221 - 80187670 or send us an e-mail to info@mth-partner.de
Lawyers in Cologne provide advice and representation in tenancy law.
