- Regarding the guidelines for rental price hikes.
The situation went awry severely: A property owner in Halle an der Saale attempted to seize the swap of smoke alarms as an opportunity to enforce a substantial lease hike. The tenants opposed and eventually prevailed in May 2023 at the Federal Court of Justice. The straightforward swap of smoke alarms does not authorize a lease hike, as per the highest court's judgment. For a lease hike is permissible only when there are technical improvements or demonstrable enhancements to the property – such as if the property owner enhances energy efficiency. The judges failed to recognize such a scenario in this specific case.
The text illustrates that tenants do not have to acquiesce to every increase – and should not. "The regulatory provisions for lease hikes are fundamentally unambiguous," elucidates lawyer Florian Timmer on the online portal Anwalt.de: "Property owners do not possess unrestricted authority to arbitrarily and excessively hike the lease." Instead, every lease hike must be substantiated plausibly by the property owner, otherwise, "a lease hike is not lawful," the lawyer asserts. There are established procedures to adhere to, as legislation safeguards tenants in a unique manner. In addition to the specific justification, the property owner must also disclose the projected lease hike, specifying the old and new lease. And the tenant pays it no sooner than three months after receiving the lease hike notification.
Permissible lease hikes and limits
Moreover, it is vital to understand: The initial lease hike may not take effect before 12 months of residing. After that, an additional waiting period of 15 months applies before another lease hike can be contemplated. Property owners must also observe the so-called limit for lease hikes. This implies that the lease may not hike by more than 20 percent within three years. The net cold lease is the basis for this. In particularly stressful housing markets, where the rent cap is in effect, even only 15 percent plus is permitted in three years.
In theory, that's how it stands. In practice, however, property owners have several methods to skirt the regulations. For example, a property owner can hike the lease to align it with the local comparative lease rate according to the lease index. Partial cost shifting for modernization measures is also feasible if they result in a proven upgrade of the apartment or house. In this case, an additional charge of up to eight percent of the investment costs is feasible, of course, calculated according to the share of the apartment in the house. However, the additional costs demanded may not surpass three euros per square meter. It is essential to note: In both cases, property owners do not have to adhere to the 15-month waiting period, but can hike the lease earlier.
Attractive new lease
Another strategy property owners often employ to promptly and flexibly enforce lease hikes is explicit agreements in the lease agreement, such as a graduated or so-called index lease. In this case, the lease then increases in regular intervals or adjusts to the general inflation rate.
Upon new leases, property owners can also ramp up the price. They are authorized to charge up to 10 percent more than the usual comparative lease rate, provided a lease index exists. If not, the lease can even be up to 20 percent above the general level. However, in an extremely tense housing market, like in Berlin, property owners can still charge 10 to 15 percent more for new leases.
Nonetheless, savvy property owners have discovered a way to sidestep this limitation by offering furnished accommodation temporarily. Such properties are exempt from the lease cap. The same applies to furnished accommodation in new buildings.
The text explains that tenants in Halle an der Saale successfully disputed a lease hike proposed by their property owner, as the swap of smoke alarms does not justify such an increase. Accordingly, property owners cannot arbitrarily increase leases without substantial justification, and every lease hike must be plausibly substantiated. Additionally, the permit for a lease hike is subject to certain limits and regulations, such as a waiting period of 15 months after the initial hike and a limit of a 20% increase within three years.
