Rent for new construction

The rent for new construction refers to the rent charged for apartments in newly built buildings. In Germany, new buildings are largely exempt from rent control regulations: Landlords renting out new apartments for the first time are free to set the initial rent, provided the building was first rented out after October 1, 2014. As a result, new construction rent in sought-after locations is often significantly higher than the local rent index-it reflects the actual construction costs and the developers’ return requirements.

Rents for New Buildings and the Rent Control Act

The Rent Control Act (§ 556d BGB) prohibits landlords from exceeding the local comparative rent by more than 10% when re-letting a property. This regulation applies in designated areas with a tight housing market, which includes Nuremberg. However, this restriction expressly does not apply to first-time landlords of new buildings-i.e., buildings rented out for the first time after October 1, 2014.

Important: The exception applies only to the initial rental. As soon as a new-construction apartment is rented out for the second time, the rent cap applies again-provided the designated area status still applies. Landlords must then determine whether the previous new-construction rent may be lawfully passed on as a prior rent or whether the 10% limit above the local comparative rent applies.

In practice, the legal classification of second-time rentals for new construction is often complex. If the initial lease was concluded at a very high new-construction rent, the landlord may, under certain circumstances, still be able to claim this as the previous rent when the next tenant moves in-provided that the exception was properly observed during the initial lease. We recommend seeking legal advice for second-time rentals.

Cost Factors Behind New Construction Rents

High new construction rents are not an arbitrary decision by landlords but result from increased construction costs. Since 2015, construction costs in Germany have risen by over 50%-driven by material prices, labor costs in the construction industry, stricter energy efficiency requirements (GEG), and increased land costs, particularly in metropolitan areas. To achieve a market-standard return on investment, developers and landlords must set the initial rent accordingly high.

Another factor: new-construction apartments generally offer greater living comfort (better insulation, modern heating technology, elevators, underground parking spaces), which justifies a higher rent compared to existing apartments. Added to this are lower utility costs due to energy efficiency-the rent including utilities for an expensive new-construction apartment can therefore be comparable to that of a cheaper existing apartment with high heating costs, despite the higher base rent.

New-Construction Rents and Rent Indexes-A Growing Problem

Rising rents for new-build apartments have a systemic side effect: rent indices only include actual existing lease agreements, not new lease rents above market rates. Since new-build lease agreements are not formally included in traditional rent index surveys, there is a gap in many cities between the reported comparative rent and actual market rents.

This results in the Nuremberg rent index systematically undervaluing actual asking rents-especially for new-construction apartments. For investors renting out a new-construction apartment with a high initial rent, this means: When a tenant moves out and a new tenant moves in, the achievable rent can drop significantly if the previous new-construction rent cannot be claimed as the prior rent.

Practical Tip for Property Owners in Nuremberg and Franconia

Anyone wishing to rent out a newly built apartment in Nuremberg is free to set the initial rent-but should ensure that the rent is sustainable and achievable in the long term. Excessively high starting rents can lead to frequent tenant turnover, resulting in vacancy periods and renovation costs.

In Nuremberg, rents for new construction currently range from 14 to over 20 euros per square meter for net rent excluding utilities, depending on location and amenities-and the trend is still rising. We are happy to advise landlords on how to price their new-construction apartments in line with the market and are familiar with current rent levels for new construction in all districts of Nuremberg as well as in Fürth and Erlangen.

Frequently Asked Questions

Does the rent control law apply to new construction?

No. For new construction units first rented out after October 1, 2014, the rent control law does not apply to the initial lease. Starting with the second rental, the general regulations of the rent control law apply, provided the area is designated as a tight housing market. In Nuremberg, the rent control ordinance is in effect.

Why are rents for new-build apartments so much higher than those for existing apartments?

Rising construction costs, higher land prices, energy efficiency requirements, and the necessary return on investment for developers mean that new-construction apartments are significantly more expensive to build than existing apartments. To make renting economically viable, owners must charge higher rents. Additionally, the greater living comfort of new buildings (modern heating, insulation, elevator) justifies a premium over the existing housing stock.

Can I have the rent for a new-build reduced after moving in?

As the first tenant of a new-build, you cannot file a rent control complaint because the exception applies. However, you may be entitled to a rent reduction if the apartment was handed over with defects or if agreed-upon features are missing. Anyone moving into a new-construction apartment should draw up a detailed handover report at the time of move-in and document all defects immediately.

Which features justify a higher rent for new-construction apartments?

New-construction apartments vary significantly in the quality of their features-and the achievable rent varies accordingly. Features that justify an above-average rent for a new-build apartment include: underfloor heating instead of radiators, high-quality flooring (real wood parquet, large-format tiles), floor-to-ceiling windows with triple glazing, smart home infrastructure, an underground parking space with an EV charging point, a well-equipped built-in kitchen, and an elevator. A good energy efficiency rating (A or A+) and sustainable building systems (heat pump, PV system) also add value. In Nuremberg, new-construction apartments with premium amenities in prime locations-such as in the Südstadt, Maxfeld, or along the Pegnitz-sometimes command rents of 18 to 22 euros per square meter for net rent excluding utilities. For investors, the extra cost of high-quality amenities is only worthwhile if the target tenant demographic (professionals and executives, dual-income households, expats) is actually able and willing to pay this rent over the long term.

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