How To Deal With A Rent Increase in Germany?

How To Deal With A Rent Increase in Germany titlecard

Real estate is always moving; therefore, rents are increasing as well. However, German landlords must always justify the rise in the price. Besides, Germany allows only several reasons for rent adjustments. It also imposes limits and caps on rent increases to protect the tenants.

It’s never good news when you now have to pay more than before. The rent increase can cause your disposal income to go down significantly. Read this detailed article about rent increases, related regulations, and how to handle if that happens to you.

When can landlords increase rent in Germany?

In Germany, the rent increase is possible only in the following cases:

  • To match the local rent
  • Due to modernization or energy-related refurbishment
  • Due to graduated or index-linked rental agreements (Staffel and Indexmietverträge)
  • After new rental of an apartment

Generally, landlords can legally increase the rent only every 15 months to adjust to the local rental price index. The first rent adjustment can be made only after 12 months from the moving-in date.

Furthermore, landlords must inform new tenants about the rent increase 3 months in advance. That means an actual rent increase will occur only after 15 months.

Depending on the location, the price increase is capped at 15% or 20% within three years. In the large cities, it’s 15%.

Rent increase explained

At the beginning of a lease, you and the landlord agree on the rent price for the apartment or house. However, the amount can increase during the term of the lease. In Germany, many people rent all their life; it’s literally impossible to keep the price the same for such a long time.

When comparable to your current apartments in the area become more expensive, your landlord has a right to increase the rent. It’s called the rent index. In the end, rents tend to increase worldwide, not only in Germany.

In Germany, tenants pay a cold rent (Kaltmiete) plus ancillary costs (Nebenkosten). Therefore, landlords can only increase rent prices by using the cold (net) rent as a basis. In the case of a rent increase, the landlord must always use the net rent as a basis.

How might the landlord notify you about the rent increase?

The landlord must send you an official letter about the rent increase. It can be done via mail as a standard letter, but also as an email.

Justification of the rent increase

In Germany, every rent increase must be justified. Most landlords will explain the rise with the current rent index, which shows that prices for comparable apartments have risen overall. You can find the rent index in your municipality on the official city’s website.

Rent and rent increases in Germany

Empty street near apartments

Study shows that in almost every second German household, 49.2% pay more than 30% of their income for rent. This number is generally recommended for someone living and earning in Germany.

At the same time, 25.9% of households spend at least 40% of their income on rent and utilities.

In Berlin, tenants are in a good position; 49.2% of households have affordable and appropriate apartments. This figure is below 44% in cities like Munich and Cologne.

Nonetheless, only in Berlin rents for apartments have increased by 42% over the last five years, from an average of €9 per sqm to €12.80.

So what should you know about the rent increase in Germany and how to handle it correctly?

Generally, German landlords can increase the rent every 15 months. The rent increase is excluded in the first 12 months of your tenancy contract. Besides, it can’t be more than 20% (15% in some states) over three years.

This rule doesn’t apply to metropolitan areas where housing is in short supply. There the cap is set at 15%. If your rent should be increased, you will receive a notification at least three months in advance.

Moreover, landlords may also increase the rent if they have made some significant renovations to the rental property. A maximum of 8% of the modernization costs can be passed on to the tenants as an increase in the annual rent.

Furthermore, a cap of 3 EUR per square meter within 6 years now applies to the allocation of modernization costs. If the rent is less than 7 EUR per square meter, the rent may only increase by 2 EUR within 6 years due to renovations.

Rent increase due to the modernization

A landlord has a right to increase the rent after extensive renovation or modernizing the property. In this case, the price may only be increased if the house’s value has increased.

Therefore, performing minor repairs isn’t sufficient for your rent to go up. There are also limits. A maximum of 8% of the costs incurred during the renovations may be passed on to the tenants.

Moreover, your landlord must give you a notice and explanation about planned renovations and the rent increase, that must contain the following criteria:

  • Start and duration of renovations
  • Their type and scope
  • Rent increase amount
  • Operating costs resulting from renovations

Inflation as a reason to increase the rent

German landlords and property owners might increase the rent because of the current inflation. In 2022, inflation is high, causing tenants to face an increase in rent between 7% to 10%.

While in the previous years, inflation was very low, causing rents to increase only by 1% to 2%.

Rental contracts and rent increase

Woman sitting on kitchen counter and typing on laptop

Moreover, some landlords or property companies include clauses in contracts that allow rent to go up. These are called Staffelmiete (stepped rent) and Indexmiete (index rent) contracts.

Staffelmiete means the rent increases gradually over time (but there are limits), usually annually. At the same time, index rent agreements mean that the rent is based on the Consumer Price Index and may be increased accordingly to the cost of living in Germany. The rent increase can happen once per year.

Consequently, if you have one of those, you are literally permitting your rent to increase.

Keep in mind that the rent cap doesn’t apply to the stepped rent type of contract. This means that the rent may increase by more than 20% within three years without you being able to take legal action against it.

Maximum allowed rent increase

In Germany, rent caps apply for rent increases. Landlords are limited by a 15%-20% rent increase limit, depending on the state. Moreover, the rent can be increased by a maximum of 20% within 3 years.

Where does the 15% cap apply? Some German federal states allow the rent increase only by a maximum of 15%, but the cap is limited to the time period.

After that deadline, the cap might increase to 20% too. At the moment, a 15% maximum rent increase applies in:

  • Baden-Württemberg – until June 30, 2025
  • Bavaria – until December 31, 2025
  • Berlin – until May 31, 2025
  • Brandenburg – until December 31, 2025
  • Bremen – until August 31, 2024
  • Hamburg – until August 31, 2023
  • Hesse – until November 25, 2025
  • Mecklenburg-Western Pomerania – until September 30, 2023 for Rostock
  • Lower Saxony – until December 31, 2027
  • North Rhine-Westphalia – until June 30, 2025
  • Rhineland-Palatinate – until September 30, 2024
  • Saxony – until June 30, 2025 in Dresden and Leipzig
  • Thuringia – until September 30, 2024 in Erfurt

Deadlines for rent increase

Generally, landlords must give tenants a period during which they can consider whether the rent increase is justified or not.

They must provide you with at least two months. This period for consideration or consent starts upon receiving the landlord’s letter and ends at the end of the following month.

For example, if you receive the letter from your landlord on May 5, the consideration period ends on July 31. If you receive the rent increase on July 30, you can think about it until September 30.

If you, as the tenant, refuse to agree to the rent increase, your landlord can only demand the higher rent by going to court and suing for approval. He must do this within three months of the expiry of the consent period.

Rent control in Germany (Mietpreisbremse)

Germany imposes the Mietpreisbremse law (rent control) on all landlords. This law regulates the permissible rental amount at the start of the rental period. In other words, it states the maximum amount of rent a landlord can charge.

All tenants in Germany can benefit from rent control. According to the law, the net cold rent (Kaltmiete) may not be more than 10% above the local comparative rent. The locally comparative rent is set out in the regional rent index.

If the landlord charges more than the permitted rent, the tenant is entitled to a rent reduction.

What to do about an unjustified rent increase?

If your landlord increases your rent unreasonably, you can seek protection and justifications. However, you should demand written reasoning for the rent increase in the first place.

After that, it’s advisable to ask for the help of a tenant’s protection association (Mietschutzverein). They will guide you on German tenancy law if needed.

Once you join the Mietschutzverein, you will be fully protected as a tenant. They may even cover legal costs arising from a dispute with your landlord.

In addition to the tenant’s protection association and free information from the net, there are special lawyers who specialize in tenancy law (Fachanwalt für Mietrecht). You can seek advice from them.

Beforehand, taking out legal insurance is recommended to reduce expenses.

Ending your tenancy in Germany

If you disagree with the rent increase, you can terminate your lease. In Germany, tenants can end the lease by giving at least three months’ notice.

The termination must always be done in a written form and submitted by the third working day of a month at the latest. Otherwise, you might pay one more month of rent unnecessary.

However, ending a fixed-term rental agreement without an important reason is impossible. Ordinary termination isn’t allowed with such contracts.

By signing a temporary lease in Germany, you agree to the state lease period and will need the landlord’s consent when moving out earlier.

Here are the allowed reasons when a temporary lease can be canceled or an ordinary notice period of 3 months can be reduced:

  • Modernization/renovation of the apartment
  • Rent increase
  • Health hazards in the apartment
  • Death of a tenant

Learn how to terminate your lease contract in Germany.

Tenant’s notice

Tenants can end a tenancy by giving three months’ notice in writing. The same notice period applies, whether you have lived in the property for three months or five years, unless a shorter or longer notice period is stated in the contract.

Landlord’s notice

When terminating a lease, a landlord must give a notice period depending on how long the tenant has been living in the apartment:

Rental periodMinimum notice period
0 – 5 years3 months
5 – 8 years6 months
8+ years9 months

This minimum notice period only applies if the landlord needs an apartment for personal use. However, if you have violated your rental contract by failing to pay rent or subletting it without informing the owner, the landlord can terminate the contract without notice.

In that case, you have a right to defend yourself in court.

Moreover, a shorter notice period or even immediate termination can apply when:

  • The apartment was used in a way that goes against contract rules
  • Disturbance of domestic peace – this means serious insults and physical attacks on the landlord or other tenants, as well as intentional damage to property or theft of electricity
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