Rent control

Rent Control - Rent control is a legal provision that limits the permissible rent for new leases in areas with a tight housing market to a maximum of 10 percent above the local comparative rent. It is enshrined in Sections 556d through 556g of the German Civil Code (BGB) and is intended to protect tenants from disproportionate rent increases.

What exactly does the rent cap mean?

The rent cap was introduced on June 1, 2015, by the Tenancy Law Amendment Act and does not apply nationwide, but only in areas designated as tight housing markets by the respective state governments via statutory order. In Bavaria, the state government has issued corresponding regulations, which are regularly updated. Since 2021, the city of Nuremberg has been one of the areas where the rent cap applies.

Specifically, the regulation means that when a new lease is signed, the agreed-upon rent may not exceed the local comparative rent-as listed in the qualified rent index of the respective municipality-by more than 10 percent. The Nuremberg rent index is updated regularly and serves as the authoritative reference for determining the maximum permissible rent.

However, the law provides for several important exceptions. The rent control does not apply to new buildings that were first occupied and rented out after October 1, 2014. Likewise excluded are apartments that are rented out for the first time following extensive modernization-provided that the modernization costs amount to at least one-third of the cost of new construction. Additionally, grandfathering provisions apply: If the previous tenant has already paid a rent exceeding the permissible limit, the landlord may also demand this rent in the new lease agreement.

Since the rent cap was tightened in 2019, landlords have been required to inform tenants, without being asked, of the circumstances they are citing to justify a higher rent-such as a previous tenant’s rent, a renovation, or the property’s new-construction status-before the lease is signed. If the landlord fails to provide this information, they cannot invoke the exception. Since the reform, tenants can reclaim overpaid rent retroactively from the date of a valid complaint.

Rights and Obligations for Landlords and Tenants

Landlords in areas subject to rent control must independently determine and adhere to the maximum permissible rent for each new lease. The calculation is based on the local comparative rent plus a ten percent surcharge. If an exception applies, the landlord must inform the tenant in writing before the contract is signed and state the reasons.

Tenants who suspect that their rent exceeds the permissible limit must submit a so-called “qualified complaint” to the landlord. This complaint must specify the amount of rent they consider permissible and provide a justification for the objection. From the date of receipt of this complaint, the tenant may reclaim the difference between the rent paid and the permissible rent. Without such a notice, there is no claim for reimbursement for past periods.

Practical Tip for Landlords in Nuremberg and Franconia

In Nuremberg, the rent cap has been in effect since 2021, and the current Bavarian Tenant Protection Ordinance extends its validity for the time being until the end of 2025. For landlords in sought-after neighborhoods such as St. Johannis, Gostenhof, or Maxfeld, this means that for every new lease, the local comparative rent according to the Nuremberg rent index must be used as a starting point.

Our network of experts recommends that landlords carefully study the current rent index and precisely calculate the maximum permissible rent before publishing a listing. Anyone planning renovations should document the costs and scope of the work so they can demonstrate eligibility for an exemption from the rent cap if necessary. For municipalities in the surrounding area-such as Fürth, Erlangen, or Schwabach-different regulations may apply in some cases, which should be checked separately.

Frequently Asked Questions

Does the rent cap also apply to furnished apartments?

Generally yes-the rent cap also applies to furnished apartments in designated areas. However, the landlord may add a reasonable furnishing surcharge to the permissible rent. The exact calculation of this surcharge is not clearly regulated by law, which leads to uncertainties in practice. For housing rented solely for temporary use, the rent control may not apply under certain circumstances.

How is the local comparative rent determined?

The local comparative rent is primarily derived from the qualified rent index of the respective municipality. In Nuremberg, this is regularly compiled based on actual agreed-upon rents. If no rent index exists, landlords and tenants can refer to rental databases, expert appraisals, or comparable apartments. The qualified rent index is considered the most reliable tool and is also the one courts prefer to use.

What penalties apply for violating the rent cap?

A violation of the rent cap is not an administrative offense and is not punishable by fines. The consequences are of a civil law nature: After filing a formal complaint, the tenant can reclaim the excess rent paid and pay only the permissible rent going forward. The landlord must reimburse the difference. Additionally, the landlord bears the risk of litigation costs if they lose in court.

What happens after the Bavarian Tenant Protection Ordinance expires?

The Bavarian Tenant Protection Ordinance, on which the rent cap in Nuremberg is based, must be regularly extended by the state government. If it expires without extension, the rent cap will no longer apply in the affected areas-landlords would then be able to charge the market price again without restriction for new leases. In Nuremberg, demand for rental apartments has significantly exceeded supply in recent years; the elimination of the rent cap would therefore allow for substantial price increases on new leases in the short term. For landlords with leases nearing expiration, it is worth monitoring political developments and strategically planning the optimal timing for renewing leases. At the same time, social aspects must be considered: The Nuremberg metropolitan region has a vested interest in stabilizing the housing market, and an extension of the regulation is likely.

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