Rent increase caps in Germany: the 20% and 15% limits

When a landlord can ask for a rise

Apart from rises you agree to (§ 557 (1)) and graduated or index rents, the landlord can raise the rent only under §§ 558 to 560 BGB (§ 557 (3)). The most common route is § 558, a rise to the local comparative rent. Three conditions apply:

• The rent must have been unchanged for 15 months on the date the rise is to take effect.
• The request can be made at the earliest one year after the last rise.
• Rises under §§ 559 to 560 (modernisation and service charges) are not counted for these two tests.

The comparative rent is formed from the usual rents agreed or changed in the past six years for homes of comparable type, size, equipment, condition and location, including energy quality, in the municipality or a comparable one. Homes with rent fixed by law or tied to subsidies are left out (§ 558 (2)).

The cap

Within three years, the rent may not rise by more than 20% (the cap) when the rise is under § 558. Rises for modernisation and service charges are set aside from this calculation. The percentage is 15% where the adequate supply of homes at reasonable terms is particularly at risk in a municipality or part of it and the area is designated; state governments designate these areas by ordinance for periods of at most five years (§ 558 (3)).

A worked calculation (a formula, not a real lease): if the rent was €800 three years ago and has had no rise since, a rise under § 558 can reach €960 at 20% (800 x 1.20), or €920 at 15% (800 x 1.15), even if the comparative rent is higher. If the comparative rent is lower than that, the lower figure governs, because § 558 never allows more than the comparative rent.

The cap does not apply where a tenant’s compensation payment for a subsidy that ended has lapsed, up to the amount of the last payment (§ 558 (4)).

Form and reasons

The request must be made in text form and justified (§ 558a (1)). The Code lists possible reasons: a rent index (Mietspiegel), a rent database, a reasoned expert opinion from a publicly appointed and sworn expert, or at least three comparable flats (§ 558a (2)). If the rent index is a range, a requested rent inside the range is enough (§ 558a (4)). Where a qualified rent index contains figures for the flat, the landlord has to state them even if relying on another reason (§ 558a (3)). A request that does not meet these requirements can be corrected in court proceedings, and the tenant still has the full consent period (§ 558b (3)).

Your deadlines

If you agree, you owe the higher rent from the start of the third calendar month after the request reaches you (§ 558b (1)). If you do not consent by the end of the second calendar month after receipt, the landlord can sue for consent, within three further months (§ 558b (2)).

You also have a special right to terminate: until the end of the second month after the request arrives, you may terminate the tenancy effective at the end of the month after that, and then the rise does not take effect (§ 561). This right applies to rises under §§ 558 and 559.

Modernisation rises have their own limits

After modernisation, a landlord can raise the annual rent by 8% of the costs spent on the flat (§ 559 (1)). Costs that maintenance would have required are excluded (§ 559 (2)). Within six years the monthly rent may not go up by more than €3 per square metre of living space; where the rent before the rise is below €7 per square metre it is capped at €2 per square metre (§ 559 (3a)). For a newly installed heating system that also meets certain energy conditions, the Code sets a lower limit of €0.50 per square metre within six years for that part. A hardship defence exists (§ 559 (4) and (5)).

The rise must be declared in text form and calculated with explanations (§ 559b (1)); the tenant owes it from the beginning of the third month after receipt, and that period is extended by six months if the work was not announced properly or the actual rise exceeds the announced one by more than 10% (§ 559b (2)).

Where the state matters

The Civil Code is federal. What differs by state is the list of municipalities with the 15% limit: the ordinances are issued by each state government. A rule that holds for one state’s cities does not tell you about another state. Look up the current ordinance of your state, or ask the housing authority of the municipality. Also check whether your lease has a graduated or index rent: then these rises are excluded or replaced (see index and graduated rents).

Which professional to consult

A tenants’ association or a lawyer specialised in tenancy can check whether a request meets § 558a. A property valuer can say whether the figure is in line with comparable rents. Payotte does not recommend individuals.