Rent increase

Rent Increase - A rent increase is an upward adjustment of the contractually agreed base rent. Sections 557 et seq. of the German Civil Code (BGB) govern the various forms and conditions under which landlords may demand a rent increase-always in compliance with tenants’ rights and statutory caps.

What exactly does a rent increase mean?

The most common form of rent increase is an adjustment to the local comparative rent pursuant to § 558 BGB. The landlord may require the tenant to agree to an increase up to the local comparative rent, provided that the current rent has remained unchanged for at least 15 months and the request for an increase is received no earlier than 12 months after the last increase. The increase must be justified in writing-in practice, this is most often done by referring to the qualified rent index, alternatively through an expert opinion or by identifying three comparable apartments.

The cap is decisive: The base rent may increase by a maximum of 20% within three years. In areas with a tight housing market-which includes the city of Nuremberg-a stricter cap of only 15% over three years applies. This limit applies regardless of whether the local comparative rent would yield a higher amount.

The second major type of rent increase is the modernization rent increase under Section 559 of the German Civil Code (BGB). If the landlord has carried out construction measures that permanently increase the utility value of the rental property, improve general living conditions in the long term, or result in sustainable energy savings, they may pass on 8% of the modernization costs incurred for the apartment to the annual rent. Pure maintenance measures-i.e., the repair of defects or the preservation of the existing condition-do not, however, justify a rent increase.

In addition, there are contractual increase mechanisms: In the case of graded rent (Section 557a BGB), the timing and amounts of the increases are already specified in the lease agreement. In the case of index-linked rent (Section 557b BGB), the rent follows the development of the consumer price index. In both cases, the possibility of an additional increase to the local comparative rent does not apply-with the exception of the modernization surcharge for index-linked rent, which is only permissible in the case of energy-efficiency renovations.

The tenant is not obligated to immediately agree to a rent increase to the local comparative rent. They have a period of consideration until the end of the second month following receipt of the request for an increase. If the tenant does not agree, the landlord may file a lawsuit seeking consent with the local court within three additional months.

Formal Requirements and Common Mistakes

A request for a rent increase must meet strict formal requirements to be valid. It must be in writing and include the proposed new rent as well as a clear justification. Common mistakes in practice include incorrect calculation of the cap limit, failure to observe waiting periods, or insufficient justification without reference to the current rent index.

In the case of a rent increase due to modernization, the landlord must give written notice of the work at least three months in advance (Section 555c of the German Civil Code) and transparently present a breakdown of costs upon completion. Maintenance costs must be excluded from the calculation-courts regularly accept flat-rate deductions, but these must be plausible.

Practical Tip for Property Owners in Nuremberg and Franconia

Since 2021, Nuremberg has been officially classified as an area with a tight housing market. This means the stricter cap of 15% over three years applies, as well as the rent cap for new leases. Landlords in neighborhoods such as St. Leonhard, Galgenhof, or Schoppershof should consult the current Nuremberg rent index before any rent increase and carefully document the calculation.

We recommend preparing the rent increase request in a timely and legally sound manner. Our team will review the permissible increase range for you, draft a legally compliant increase notice, and assist you as needed until the tenant’s approval is obtained. This helps us avoid invalid increase requests and unnecessary legal disputes.

Frequently Asked Questions

How often can the rent be increased?

An increase to the local comparative rent may be requested no earlier than 15 months after the start of the tenancy or after the last rent increase. The cap limits the total increase to a maximum of 15% (in Nuremberg) or 20% within three years. Rent increases due to modernization are independent of this and are not subject to any time limit-however, the monthly rent may increase by no more than 3 euros per square meter within six years as a result of modernization (for rents under 7 euros: a maximum of 2 euros).

Does the tenant have to agree to a rent increase?

Yes. In the case of an increase to the local comparative rent, the tenant must give their consent-they have until the end of the second month following receipt of the increase request to do so. If the tenant refuses to consent, the landlord may file a lawsuit to obtain consent within three months. In the case of graduated rent and index-linked rent, however, no separate consent is required, as the increase is already contractually agreed upon.

What happens in the case of a rent increase due to modernization?

In the case of a rent increase due to modernization, the landlord may allocate 8% of the modernization costs attributable to the respective apartment to the annual rent. The measure must be announced at least three months in advance. Pure maintenance costs must be excluded from the calculation. The tenant has a special right to terminate the lease until the end of the second month following receipt of the notice of increase. In the case of extensive modernizations, a hardship objection may also apply if the new rent would be unreasonable for the tenant.

How does the rent cap work in Nuremberg for new leases?

The rent cap under Section 556d of the German Civil Code (BGB) has been in effect in Nuremberg since its introduction and limits the initial rent for new leases to a maximum of 10 percent above the local comparative rent. It should be noted that the rent cap applies exclusively to new leases-existing tenancies are regulated by the cap limit, not by the rent cap. Landlords in Nuremberg who are re-letting an existing apartment must therefore first determine the local comparative rent from the current Nuremberg rent index and may not exceed it by more than 10 percent. Exceptions apply to new buildings (first occupancy after October 1, 2014), extensively modernized apartments, and cases where the previous rent was already above the permitted limit. For landlords, the rent cap means that staying continuously informed about the rent index is essential. The Nuremberg rent index is updated regularly and serves as the basis for both rent increases in existing leases and the permissible initial rent for new leases.

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