Rent Control Act (old)

The Rent Increase Act (MHG) was a German federal law enacted in 1974 that regulated the permissibility of rent increases for residential properties, introducing in particular the concept of the “local comparative rent” as a benchmark. It was a significant milestone on the path to modern social tenancy law and was incorporated into the German Civil Code (BGB) on September 1, 2001, where its core provisions continued to apply in Sections 557 et seq. BGB. Today, the MHG no longer has any practical significance as a standalone law.

Historical Significance of the Rent Level Act

The MHG was enacted in response to the housing shortage and uncontrolled rent increases of the postwar decades. It limited rent increases for the first time to the local comparative rent and introduced the qualified rent index as a central instrument for determining rent. In doing so, it laid the foundation for today’s rent increase law, which essentially follows the same system: rent increases are only permissible up to the comparative rent and must be justified by rent indices, comparable apartments, or expert opinions.

The law reflected the social policy conviction of the 1970s that housing is not merely a market commodity but a particularly vulnerable aspect of daily life deserving of protection. This principle continues to shape German tenancy law to this day: Unlike in many other European countries, residential tenancy law in Germany is heavily regulated and offers tenants extensive protections compared to the rest of Europe.

Integration into the BGB and the Current Legal Situation

With the 2001 rental law reform, the provisions of the MHG were incorporated into the BGB. Since then, Sections 558-560 of the BGB have governed rent increases based on the local comparative rent, graduated and index-linked rents, as well as increases in operating costs. Over time, rent controls (Section 556d BGB, since 2015) and stricter rent cap limits were added. The original MHG has thus been absorbed into the BGB from a legal technical standpoint-however, anyone analyzing older lease agreements will still find references to MHG sections that today correspond to the relevant BGB provisions.

The transition to the BGB was not merely a matter of redaction: protective regulations were simultaneously tightened, for example through the introduction of the cap limit as an independent instrument and the extension of the reflection period for tenants. The reform modernized the law on rent increases in many details and adapted it to the experiences gained from 27 years of MHG practice.

Old Leases and Historical References

For current tenancies, the MHG no longer plays a role as an independent legal basis. However, anyone reviewing old leases from the 1970s to the 1990s-for example, when purchasing an existing property with existing tenants-may encounter clauses or references that cite the MHG. These must then be interpreted in accordance with the successor provisions in the BGB. Historical knowledge of the MHG may be relevant for assessing whether a rent increase was lawful at the time or whether claims still exist.

Especially in the case of very old tenancies-tenants who have lived in the same apartment since the 1980s-the history of rent increases is often incompletely documented. In exceptional cases, erroneous increases under the old MHG law can still affect the permissible current rent level today because the erroneously increased rents did not formally take effect.

Practical Tip for Property Owners in Nuremberg and Franconia

Anyone acquiring an existing property in Nuremberg with very old tenancies-such as long-term tenants dating back to the 1980s-should verify the accuracy of the rent history and previous increase notices. Incorrect old increases can, in rare cases, affect the current rent level.

We always recommend having such portfolios reviewed by an attorney specializing in tenancy law before issuing new rent increases. Particularly in Nuremberg’s Wilhelminian-style buildings in the Südstadt, Gostenhof, or the residential area around St. Johannis Monastery, there are still tenancies that have existed for decades and whose rental history should be fully documented. A tenancy law audit of these old contracts is a wise investment before purchasing any multi-unit residential property with long-term tenants.

Frequently Asked Questions

Is the Rent Level Act still in effect?

No. The MHG was repealed on September 1, 2001, and incorporated into the BGB. The provisions remain in effect in substance, but as BGB regulations, no longer as a separate law.

What was the MHG’s most important contribution?

The introduction of the “locally customary comparative rent” as a binding benchmark for rent increases and the legal recognition of the qualified rent index as a basis for justification. These concepts continue to shape German tenancy law to this day.

Are contracts that still refer to the MHG invalid?

No. References to MHG sections in old lease agreements are considered dynamic references to the respective successor provisions in the BGB. The contracts remain valid.

Why is the history of the MHG relevant for real estate investors?

Anyone who acquires existing properties with existing tenants also acquires the history of the tenancies. Incorrect rent increase requests from the past can weaken the landlord’s current legal position. Furthermore, the history of tenancy law shows that the legislature has tended to expand tenant protections over the long term-a trend that long-term investors should factor into their calculations.

How do I verify whether past rent increases under the MHG were carried out correctly?

To verify historical rent increases under the MHG, you will need the original increase notice as well as the underlying rent index or the comparable properties used. Missing justifications, letters not properly served, or increases that exceeded the cap at the time rendered the increase invalid-which means that the legally effective rent may be lower than the last amount paid. For older leases from the 1980s and 1990s in Nuremberg’s Gründerzeit neighborhoods, we recommend having a specialized attorney review the rental history before attempting a rent increase.

The Nuremberg Rent Index as a Successor Instrument

The MHG laid the foundation for the qualified rent index as the central basis for justifying rent increases. In Nuremberg, the rent index is regularly compiled and published by the City of Nuremberg in collaboration with landlord and tenant associations. It is considered a qualified rent index within the meaning of Section 558d of the German Civil Code (BGB) and thus has a legal presumptive effect: If the requested increase does not deviate from the rent index, it is presumed to be in line with local market rates. Anyone planning a rent increase in Nuremberg should use the current rent index as the primary basis for justification-it offers legal certainty and is transparent and comprehensible to both parties. Landlords who instead rely on expert opinions or comparable apartments bear a heavier burden of proof and risk more frequent disputes with tenants.

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