Local market rent

The local comparative rent is the net rent (excluding utilities) typically paid in a municipality for housing of a comparable type, size, amenities, condition, and location. It serves as the legal cap on rent increases (Section 558 of the German Civil Code) and as the reference value for rent control. In cities with a rent index-including Nuremberg-the local comparative rent is systematically derived from rental data and published regularly.

Rent Index as the Basis for the Local Comparative Rent

The rent index is the most important tool for determining the local comparative rent. Nuremberg has a qualified rent index, which is compiled by the city in collaboration with tenant and landlord associations. It categorizes apartment rents by year of construction, neighborhood (basic, average, good), apartment size, and amenities (e.g., balcony, modern heating, bathroom fixtures). The Nuremberg rent index is generally updated every two years and is available free of charge on the City of Nuremberg website.

Anyone drafting a request for a rent increase must carefully classify their own apartment within the rent index: year of construction, location, and amenities determine the range to which the claim applies. A common mistake is incorrectly classifying the apartment into a higher-than-appropriate amenities category-which can render the rent increase request invalid. We assist landlords with the correct classification and the drafting of the increase notice.

Implications for Rent Increases and Rent Control

Landlords may raise the rent up to the local comparative rent (§ 558 BGB), subject to the cap (20% over three years; 15% in tight markets). The rent cap (§ 556d BGB), which applies in certain municipalities in Bavaria, limits the initial rent for new leases to a maximum of 10% above the local comparative rent. For landlords, knowledge of the current rent index is therefore essential-it establishes the legal limit for rent increase requests and rents for new leases.

In practice, there is an important difference between rent increases during the current tenancy and the initial rent for new leases: For existing tenants, the comparable rent serves as the upper limit for rent increases (plus the cap limit). For new leases, the rent control law applies, which limits the initial rent to a maximum of 10% above the comparable rent. However, both regulations only take effect if the tenant actively asserts their rights-there is no automatic refund.

Local Comparative Rent and Tax Implications

The local comparative rent also plays a role in tax matters: If an apartment is rented to relatives (e.g., children, parents) for less than 66% of the local comparative rent, the tax office recognizes only a proportionate amount of the income-related expenses (Section 21(2) of the Income Tax Act). If the rent is between 50% and 66% of the comparable rent, an assessment of the intent to generate income is required. If it is below that, no income-related expenses are recognized. We recommend that owners always consult the current rent index when renting to relatives.

This tax aspect is particularly relevant when owners lease apartments to children at nominal rents while simultaneously seeking to claim substantial income-related expenses. In such cases, the tax office closely examines whether the 66% threshold is met. In case of doubt, it is advisable to seek tax advice to determine the optimal rent amount.

Practical Tip for Owners in Nuremberg and Franconia

Landlords in Nuremberg should not only be familiar with the rent index but also regularly check whether their current rents still reflect market rates. If the rent for a property is significantly below the local comparative rent-which is common in long-term leases in popular neighborhoods such as Maxfeld, Gärten hinter der Veste, or St. Johannis-there is a right to a gradual rent increase. We can assist you in formulating the request for an increase in a way that is legally sound and acceptable to the tenant.

For new leases, we recommend using the current Nuremberg rent index as the lower limit for pricing and calculating the initial rent based on current market data-not just the comparable rent. In sought-after locations such as the Old Town or St. Johannis, the actual rents that can be achieved are often significantly higher than the average in the rent index, which is fully permissible within legal limits.

Frequently Asked Questions

How do I determine the local comparative rent for my apartment in Nuremberg?

Use the current Nuremberg rent index (available from the City Planning Office or online), select the appropriate year of construction column, residential location category, and amenities class, and note the average value and range. If you are unsure, we can help you classify your property correctly.

Does the rent cap apply in Nuremberg?

Yes. Nuremberg is classified as a tight housing market; the Bavarian Tenant Protection Ordinance is currently in effect until the end of 2025. New leases may not exceed the local comparative rent by more than 10%; exceptions apply to first-time occupancy, comprehensive modernization, and rents that were already above this level prior to the rent cap.

Can I deviate from the local comparative rent?

As a landlord, you cannot contractually exclude the rent cap for new leases. For existing leases, it is not possible to exceed the comparative rent through rent increase requests. However, downward deviations are permitted and occur, for example, in cases of social housing or for family members.

What happens if I charge too much rent?

The tenant can object to the rent cap and reclaim the excess rent-but only from the date of the objection, not retroactively. A valid objection must be made in writing. We recommend that landlords carefully calculate the initial rent to avoid costly retroactive claims.

How often is the Nuremberg rent index updated, and what changes as a result?

The Nuremberg rent index is generally updated every two years and reflects the development of agreed-upon net base rents over a four-year reference period. During an update, both the average values and the ranges within the individual amenity and location categories are adjusted. In years with sharply rising market rents, the adjustment can be significant, while in calmer market phases the changes are moderate. Important for landlords: Even if the rent index is updated, an existing rent increase request based on the old rent index and already delivered remains valid. For new rent increase notices, however, the most current rent index must be used. In Nuremberg, the trend in recent rent index updates shows a continuous upward trajectory, which is particularly evident in the inner-city neighborhoods of Maxfeld, Gärten hinter der Veste, St. Johannis, and the Südstadt. We monitor these developments for our clients and proactively inform them when a new version of the rent index allows for an adjustment of existing rents.

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