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Rent increase
Arbitrary rent increase excluded
No landlord is allowed to take what he can get. There is a maximum limit for old buildings and privately financed new builds: the ‘local comparative rent’. It must remain unchanged for at least one year. A written justification based on a rent index, expert opinion or three comparable flats is a prerequisite for any increase. The tenant has two months to check the information.
Rent increases are the order of the day – especially due to the short supply of flats. However, not every increase is justified. No landlord is allowed to set the rent at will. And even if an increase is permitted, the landlord must adhere to many of the criteria set out in the law.
So that you know whether a rent increase is legal in your case, we have collected everything you need to know about the topic and summarised it for you in a way that is as easy to understand as possible. After all, it is not uncommon for tenants to pay simply because they are not sufficiently aware of their rights or are simply not familiar with the legal ‘jargon’.
The ‘normal’ rent increase
Sooner or later, every tenant will have to face it. However, it is not enough for the landlord to announce it verbally at the door or on the telephone. It must be made in writing and signed by all landlords. If the landlord involves a lawyer, the original landlord's authorisation must be enclosed with the rent increase. Now it is up to you to agree to the demand. You have time to do this or to check it. The rest of the current month plus a further two months. If you refuse or do not respond at all, the landlord will have to take you to court. But be careful: the tenant must agree, at least in part, to a rent increase that is proper in terms of form and content. Otherwise, you risk losing a possible lawsuit. However, this does not mean that you have to settle all claims in full. In principle, a rent increase is only proper if the rent has previously remained unchanged for at least one year. However, if the increase is due to modernisation or increased operating costs, it can also be incurred within this one-year period
...due to modernisation
Not everything that the landlord claims is a modernisation is really one. The landlord must pay for repairs and maintenance out of his own pocket. They do not justify a rent increase. Genuine modernisations improve the quality of living or make it possible to save heating energy or water. The tenant must have agreed to the modernisation beforehand or was obliged to tolerate it. In the event of a rent increase following modernisation, all measures must be broken down individually. This will help you as a tenant to identify any repairs that were wrongly assessed as modernisation. After receiving a rent increase, the new rent must be paid from the third month. If an increase was not announced in good time, the deadline is extended by six months. This also applies if a rent increase announced in good time is exceeded by more than 10%.
... due to subletting
According to the law, the landlord can make his consent to a requested subletting dependent on a reasonable increase in the rent - a subletting surcharge. The question of what is ‘reasonable’ is a question of the individual case. According to the Berlin Regional Court (66 S 29/18), a flat-rate surcharge of EUR 5 to 30 is appropriate for the landlord's increased expenses and increased material risks. A higher surcharge may be considered if there is a concrete threat of financial disadvantages for the landlord, for example if higher operating costs cannot be allocated due to a lower rent because of an agreed inclusive rent.
Calculation of a rent increase based on modernisation:
The old tiled stoves in a flat have been replaced by a gas-fired floor heating system. The costs of EUR 9,000 can be passed on to the tenant. But not all at once. Only 11% of this EUR 9,000 is added to the annual rent. In this case, that would be EUR 990. Divide this amount by 12 and you get the monthly rent increase: EUR 82.50.
...due to increased operating costs
This type of rent increase is very rarely considered, as in most cases the tenant pays service charges in addition to the basic rent. Either as an advance payment or as a lump sum. If this is not the case and the tenancy agreement expressly states that the landlord may pass on increased operating costs, e.g. waste disposal charges, the rent can be increased by these costs. However, if the operating costs are settled by means of an annual service charge statement, the tenant must pay the corresponding amount retrospectively if the advance payment is insufficient.
Capping limit and local comparative rent
The law stipulates two upper limits for how much rent a landlord may charge. One is the so-called rent cap, the other is the local comparative rent. The rent cap restricts rent increases to 20% within three years. As a result of the Capping Limit Ordinance, which came into force on 1 June 2014, the cap on the adjustment of existing rental agreements to the local comparative rent is limited to 15% in 59 municipalities in NRW, including Cologne.
The upper limit for any rent increase is the local comparative rent. This refers to the average rent from rental agreements of the last four years for a certain type of flat in the respective municipality. This means that the tenant does not have to pay more for their flat than is usually paid locally for flats of the same type, size, furnishings, quality and location. The landlord must explain in his rent increase letter that he is not asking for more than the local comparative rent.
The law provides the landlord with three possible criteria for this justification: the rent index, the expert opinion or the naming of three comparable flats.
Rent index
Rent indexes are overviews of the local comparative rent. They must either be prepared by the local authority itself or jointly prepared and regularly revised by the interest groups, i.e. tenants‘ and homeowners’ associations. Price overviews from tax offices, estate agent associations etc. are not rent indexes and are therefore not permitted for the rent increase procedure.
If the landlord justifies the rent increase on the basis of a rent index, he must allocate the rental flat to a specific rent index field, taking into account the year of construction of the building, the size of the flat, its furnishings and the residential area.
Qualified rent indexes are prepared according to recognised scientific principles, i.e. on a representative data basis and with methodical evaluation. They must be recognised by the municipality or city. Alternatively, it is also sufficient if they have been accepted by the tenants‘ and landlords’ interest groups. This qualified rent index must be adjusted to market developments and updated after two years, and must be revised after four years at the latest.
The current version of the Cologne rent index and well over 20 rent indices from neighbouring municipalities are available from our offices. We would also be happy to send them to you.
The landlord can also have the standard local rent for the flat in question determined by an expert opinion. However, the expert opinion is the most expensive and therefore the least common means of justification for the landlord. Certain requirements must be met:
The expert must be qualified. He or she must be publicly appointed and sworn in for a specialist area that at least also deals with rent valuation. Expert opinions or expertises from a bank or estate agent are never sufficient.
The full wording of the expert opinion must be attached to the rent increase.
The expert opinion must be justified and comprehensible and must not be older than two years. A statement on the actual local comparative rent is required. In doing so, the rental flat appraised must be categorised in the local rent structure.
The expert must also have seen the flat he is valuing. In large residential complexes, it is sufficient if he has seen a flat of the same type.
Another way to justify a rent increase is to name three comparable flats. The landlord has a free choice here. He can name the most expensive flats in the neighbourhood as well as flats from his own portfolio that have just been rented out at a high price. To enable the tenant to check comparability, the tenant's name, address, floor and number of square metres must be stated. If the comparative flats named as justification differ significantly from the rented flat in terms of living space, they do not fulfil the formal requirements of the rent increase request. This means that the landlord must send a new rent increase with a new justification.
A rent cannot be increased due to increased capital costs – mortgage interest.
In principle, it is always worth checking claims for rent increases before payment. The Cologne Tenants' Association will support you to the best of its ability. As a self-help organisation for tenants - independent of the state and political parties – we are committed to all matters relating to tenancy law. We will be happy to provide you with information on the advantages of membership of the Cologne Tenants' Association and how we can help you to assert your rights
The graduated rent
In this case, the extent to which the rent may increase in future is already agreed when the contract is concluded. There must be at least one year between each individual ‘scale’, i.e. rent increase. The specific monthly rent or the amount of the increase must be expressly stated. Stating the price per square metre alone is not sufficient. An agreement according to which the rent is to increase by five per cent each year, for example, is also not a graduated rent agreement and is invalid. Important: The landlord does not have to send a rent increase. The rent increases take effect ‘automatically’. Other rent increases are excluded.
The index-linked rent
You can agree with the landlord that the rent will be determined by the price index for the standard of living for all private households in Germany as determined by the Federal Statistical Office. The rent must remain unchanged for at least one year. It is also necessary for the landlord to state the old and current price index in his written declaration of rent increase. The difference must be converted into a percentage and used to calculate the new rent or the amount of the rent increase. Unlike the local comparative rent, the tenant's consent is not required. The tenant must pay the increased rent from the month after next.
The temporary tenancy agreement
Rent increases are excluded during the agreed term of the tenancy agreement if the tenancy agreement does not state otherwise.