Reasons for a rent increase by the landlord

The rent increase as a modernization levy is a special case. As a landlord, you are allowed to charge your tenant up to 11% of the costs of the relevant measures each year. However, these must be listed in detail in the rent increase letter so that the tenant can understand which renovation and modernization work was carried out and why. It should be noted that there are differences between modernization and maintenance. The latter is the contractual obligation of every landlord and is not a permissible reason for increasing the rent. Which activities count as modernization is set out in Section 555b of the German Civil Code (BGB); according to this, energy-related renovations or work that improves the residential value are considered modernization that also provides the tenant with an advantage.

Tenancy agreements can be specified more specifically by means of graduated and index-linked rents. These two variants are less common, but offer some advantages for the landlord. The index-linked rent is based on the cost of living of a private household. It takes into account electricity, gas and water consumption costs, as well as expenses for food and clothing. The amount is based on the consumer price index, which is calculated by the Federal Statistical Office. If the cost of living rises according to this index, landlords can increase the net rent in the same proportion. In the case of graduated rent, the rent is increased by a certain amount at fixed intervals. Both must be stipulated in the rental agreement. In contrast to the index-linked rent increase, the increase does not have to be announced in writing in advance; instead, it takes effect automatically at the defined time. However, a period of at least twelve months must be observed between two rent increases.

If the contract does not provide for an index-linked or graduated rent, it is possible to increase the rent in line with the local rent. The rent index of the city or town must be consulted. It contains information on the local comparative rent. If no rent index is available, you can also send an inquiry to the local authority. An important factor in this type of rent increase is the rent cap or rent brake. Legislation stipulates a maximum rent increase per year or over a period of several years, which may not be exceeded. A rent increase despite the rent cap is generally not permitted. The rent cap mainly affects metropolitan areas, where it is often stipulated that a rent increase for new tenancies cannot exceed 10 percent of the local comparative rent.

A correct sample letter is the essential basis for a permissible rent increase. It must contain a correct salutation, a subject line that clearly states what it is about and a reference to the landlord’s compliance with the rent cap. This means that at least one year must elapse between two rent increases. Other components of the letter include the current rent index, reasons for the increase, a reasonable deadline for the tenant until the rent increase comes into effect and a request for consent. It is best if you directly enclose a declaration of consent for a mutually agreed rent increase. The period for consent must be at least two months. In the course of a rent increase, the tenant has a special right of termination, which they can exercise within two months and which allows the tenancy to be terminated with effect from the month after next.