Rent increases in residential tenancies: What landlords need to bear in mind

Many land­lords wish to adjust the rent, but in doing so they make pro­ce­du­ral errors which can ren­der the enti­re request for an increase inva­lid. The Ger­man Civil Code (BGB) sets out clear requi­re­ments, and anyo­ne who fails to com­ply with the­se can­not demand the tenant’s consent.

What types of rent increases are there?

The law pro­vi­des for various ways of incre­asing the rent. The most important of the­se are the adjus­t­ment to the local com­pa­ra­ti­ve rent in accordance with Sec­tion 558 of the Ger­man Civil Code (BGB), a rent increase fol­lo­wing moder­ni­sa­ti­on in accordance with Sec­tion 559 of the BGB, and the agreed gra­dua­ted or index-lin­ked rent. In addi­ti­on, the­re are chan­ges to ser­vice char­ges under Sec­tion 560 of the Ger­man Civil Code (BGB). This artic­le focu­ses on the most com­mon sce­na­rio in prac­ti­ce: an increase up to the local com­pa­ra­ti­ve rent.

Conditions for a valid rent increase

Land­lords wis­hing to increase the basic rent must obtain the tenant’s con­sent. Howe­ver, this con­sent can only be requi­red under cer­tain conditions:

• One-year blo­cking peri­od: A request for a rent increase may be made no ear­lier than one year after the last rent increase. Fur­ther­mo­re, the rent must have remain­ed unch­an­ged for at least 15 months at the time of the reques­ted increase.
• Cap: In most regi­ons, rent may not rise by more than 20 per cent over a three-year peri­od. In are­as with a tight housing mar­ket, a lower limit of 15 per cent applies.
• Local com­pa­ra­ti­ve rent: The new rent must not exceed the local com­pa­ra­ti­ve rent. This is usual­ly deter­mi­ned on the basis of the cer­ti­fied rent index, com­pa­ra­ble pro­per­ties or expert reports.
• Suf­fi­ci­ent grounds: The request for an increase must be made in wri­ting and sup­port­ed by clear and com­pre­hen­si­ble reasons.

A common mistake: sending a payment request instead of a request for consent

Some land­lords ask the ten­ant direct­ly to pay the hig­her rent wit­hout expli­cit­ly see­king their con­sent. This is not per­mit­ted under the law. Such a request for an increase is inva­lid and has no legal effect whatsoe­ver. In this case, the ten­ant is not obli­ged to pay more.

What happens if the tenant agrees?

If the ten­ant agrees to the request for a rent increase, a new agree­ment on the rent amount is con­cluded. The Fede­ral Court of Jus­ti­ce (BGH) has cla­ri­fied that it is then no lon­ger rele­vant whe­ther the ori­gi­nal request was for­mal­ly cor­rect or ful­ly jus­ti­fied in sub­s­tance. Con­sent the­r­e­fo­re reme­dies minor pro­ce­du­ral shortcomings.

A mutually agreed rent increase as an alternative

Irre­spec­ti­ve of the sta­tu­to­ry requi­re­ments, land­lords and ten­ants may agree on a rent increase at any time. Both par­ties have con­sidera­ble free­dom in this regard. For the sake of evi­dence, this agree­ment should also be set out in writing.

Land­lords plan­ning a rent increase, or ten­ants who have recei­ved a noti­ce of a rent increase and are unsu­re whe­ther all the requi­re­ments have been met, should seek legal advice. Mista­kes on eit­her side can pro­ve costly.