Germany: rent brake and rent increases, what is allowed

Two rules for two situations

Two sets of rules decide how high the rent may be. At the start of the lease the rent brake limits the agreed rent (BGB §§ 556d to 556g). After that the landlord may raise the rent only under BGB §§ 558 to 560 unless something else was agreed (BGB § 557 para. 3): up to the local comparable rent, after modernization or when utility costs change.

The rent brake at the start of the lease

In areas with a tight housing market, the rent on a new lease may exceed the local comparable rent by at most 10 percent (BGB § 556d para. 1). Which areas those are is decided by the state governments by ordinance; it may apply until December 31, 2029 at most. You read the comparable rent from the rent index (Mietspiegel): an overview of the usual rent drawn up or recognized by the authority or by the representatives of landlords and tenants (BGB § 558c para. 1).

The brake does not apply to an apartment first used and let after October 1, 2014, nor to the first letting after comprehensive modernization (BGB § 556f). The rent may also be higher if the previous tenant already paid that much (BGB § 556e para. 1), or after a modernization in the last three years: then the surcharge that a modernization rent increase would give is added (BGB § 556e para. 2).

If the landlord relies on an exception, he must inform you before you make your declaration to enter the lease, otherwise he cannot rely on it at first (BGB § 556g para. 1a). You only get excess rent back if you objected to the breach in text form. If you object within 30 months of the start of the lease, that applies from the start; if you object later, only from receipt of the objection (BGB § 556g para. 2).

Rent increase up to the comparable rent

During the lease, the landlord may ask for consent to a higher rent up to the local comparable rent if the rent has been unchanged for 15 months at the time the increase is to take effect. The request may arrive at the earliest one year after the last increase (BGB § 558 para. 1).

It must be made in text form and justified (BGB § 558a). Text form means a readable statement on a durable medium naming the sender, for example a letter or an email (BGB § 126b). For the justification one can refer, for example, to the rent index, a rent database, the opinion of a publicly appointed and sworn expert or three comparable apartments. With a rent index that gives ranges, it is enough if the rent requested lies within the range.

The cap and the deadlines

Even up to the comparable rent, the rent may not rise by more than 20 percent within three years (cap); in municipalities that the state government has designated as particularly at risk, it is 15 percent. Increases after modernization or for utility costs do not count (BGB § 558 para. 3). With €620 three years ago, €805 comparable rent and 20 percent, the limit is €744: €44 more than today’s €700.

If you consent, you owe the higher rent from the first day of the third calendar month after receipt; you can consent until the end of the second calendar month. After that the landlord may sue for consent within three further months (BGB § 558b). If the request arrives in October, the higher rent applies from January 1, and you have until December 31.

Your rights after a request

You do not have to consent at once: check the form, the justification, the deadlines and the amount. You can also consent only in part, as far as the increase is permitted; if no agreement is reached, the landlord may sue, and a court decides (BGB § 558b). You can also terminate extraordinarily, until the end of the second month after receipt, effective at the end of the month after next; then the increase does not take effect (BGB § 561). Of course, that also ends the tenancy.

Modernization, graduated and index-linked rent

After certain modernizations the landlord may raise the annual rent by 8 percent of the costs incurred, at most by €3 per square meter of living area a month within six years, or €2 where the rent is below €7 per square meter (BGB § 559). The statement must calculate and explain the increase; the time until the higher rent applies is extended by six months if the measure was not properly announced or the increase exceeds the announcement by more than 10 percent (BGB § 559b).

With a graduated rent, each increase is in the contract; during its term increases under BGB §§ 558 to 559b are excluded, and the rent brake applies to each step (BGB § 557a). With an index-linked rent, the rent follows the consumer price index; an increase under § 558 is excluded, and the rent brake applies only to the starting rent (BGB § 557b).