Net rent (excluding utilities)

The net rent is the base amount of the rent, which includes neither operating costs nor heating costs. It represents the tenant’s actual payment for the use of the living space and serves as the basis for rent increases, comparisons with rent indices, and the calculation of the return on an investment property. Colloquially, it is also referred to as “basic rent,” although the term “net basic rent” is more precise in the context of tenancy law.

Distinction from “warm rent” and “gross rent”

German tenancy law distinguishes between various rental terms:

• Net basic rent: Rent without any ancillary costs-neither operating nor heating costs
• Base rent with advance payment of operating costs: Net base rent plus a monthly advance payment for operating costs (excluding heating)
• Inclusive rent (gross rent): Net base rent including all operating costs and heating costs

When searching for an apartment and in rent indices, the net base rent is generally used, as it is comparable regardless of location-utility costs vary greatly depending on the property, consumption, and management. Anyone comparing different rental offers should therefore always focus on the net base rent and not directly compare the total cost of gross rent and utility costs without knowing the breakdown.

Relevance for Rent Increases and Rent Indexes

The net rent (excluding utilities) serves as the benchmark for rent increases under Section 558 of the German Civil Code (BGB) (adjustment to the local comparative rent). The landlord may increase the net rent (excluding utilities) up to the local comparative rent, which is listed in the rent index of the respective municipality.

In Nuremberg, there is a qualified rent index that is regularly updated and differentiates values based on year of construction, neighborhood, and amenities. The landlord must justify the planned increase in writing and refer to the rent index. Within a three-year period, the net rent may increase by a maximum of 15% (cap in tight markets such as Nuremberg). Additionally, there must be a minimum of twelve months between two consecutive rent increases. The tenant has a two-month period to consent after receiving the notice of increase.

Net rent and rent control

In Nuremberg, rent control applies under Section 556d of the German Civil Code (BGB). It stipulates that the net rent for a new lease may not exceed the local comparative rent by more than 10%. Exceptions apply to new buildings, extensively modernized apartments, and the transfer of an existing prior rent that was already above the limit. The rent control law explicitly refers to the net rent-advance payments for operating costs are not affected by this.

Net rent as a basis for calculating return

For investors, the net rent is the key factor in calculating return. The gross rental yield is calculated as the ratio of the annual net rent to the purchase price:

Gross yield = (Monthly net rent × 12) ÷ Purchase price × 100

The net rent is significantly more stable and predictable than the gross rent, as operating costs can fluctuate greatly. A reliable rental yield is therefore always based on the net rent excluding utilities. Furthermore, the net rent excluding utilities serves as the basis for calculating the maintenance reserve and for tenant contributions in the event of energy-efficiency upgrades (rental increase due to modernization pursuant to Section 559 of the German Civil Code (BGB)).

Practical Tip for Property Owners in Nuremberg and Franconia

In Nuremberg, net cold rents range from 9 to over 16 euros per square meter, depending on the city location and apartment type (as of the current Nuremberg rent index). In sought-after locations such as Südstadt, St. Johannis, or the Old Town, peak rates are frequently achieved for new leases. Landlords who wish to adjust their rent should consult the applicable rent index and observe the cap limit.

We assist landlords in the metropolitan region with the legally compliant implementation of rent increases and the assessment of market-based rent levels. In doing so, we ensure that rent increase requests are formally correct to avoid subsequent challenges by the tenant.

Frequently Asked Questions

What is the difference between net rent and base rent?

In common parlance, the terms are often used interchangeably. Legally speaking, “net rent” is more precise, as it explicitly excludes all utility and heating costs. Colloquially, “base rent” can also refer to rent that includes a flat-rate for utilities. Property listings should always clearly state whether the rent is listed as net or as a total amount.

Can the landlord increase the net rent at will?

No. Rent increases are tied to the local comparative rent and are subject to a cap (in Nuremberg: max. 15% over three years). In addition, the landlord must wait one year since the last rent increase. In tight housing markets like Nuremberg, rent control may also apply to new leases.

Why does the net rent in the rent index differ from my current rent?

The rent index reflects the local comparative rent-that is, an average based on actual lease agreements in comparable locations. Existing lease agreements are often below the rent index value, while new lease agreement prices are often above it. Long-term tenancies with low existing rent can be adjusted up to the comparative rent-provided the cap limit and one-year waiting period are observed.

How does energy-efficient modernization affect the net base rent?

Following energy-efficient modernization, the landlord may, pursuant to Section 559 of the German Civil Code (BGB), pass on up to 8% of the costs incurred annually to the net base rent (so-called modernization rent increase). For an investment of 20,000 euros in thermal insulation and new windows, this means a potential increase in the net rent of up to 1,600 euros per year, or about 133 euros per month. The tenant must be notified of the renovation in writing at least three months before it begins. The apportionment is capped if the rent has increased by more than 3 euros per square meter of living space within six years following the increase (known as the cap on rent increases due to modernization). In Nuremberg and other tight markets, an absolute cap of 2 euros per square meter of living space also applies. Owners should therefore carefully plan modernization measures and their implications under tenancy law in advance.

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