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Rent Control – Caution when increasing rents

Mar 31, 17 • Real Estate LawNo Comments

Since June 2015, the German federal states can designate areas with a particularly tense housing market and apply a so-called rent control. When renting out a property in such area to a new tenant, the rent must not exceed the local reference rent by more than 10%. As was to be expected, the first decisions on this issue are currently being published.

Previous tenant paid more than reference rent

In June 2016, the local court (AG) of Munich had to decide on a case where a new rental agreement was concluded with a rent of 1,300 euros. However, the local reference rent only amounted to 910 euros, i.e. the maximum rent should have been no more than 1,100 euros. However the previous tenant had already paid 1,100 euros.

Now the local court decided that the landlord was in fact entitled to demand the former rent but not to increase it to 1,300 euros. This decision comes as no surprise as it results directly from the law. The more interesting point is that – at the same time – the local court dismissed the landlord’s action for eviction. In fact, the landlord had tried to contest and terminate the rental agreement because the tenant – in the landlord’s opinion – had only pretended to agree to the rent although from the beginning she intended to complain about it later.

No duty to inform the landlord about infringements

In this case, the local court clearly decided that, in case of a new rental agreement, the tenant had no duty to inform the landlord about a possible infringement of the rent control requirements, and that the tenant was hence entitled at any time to rely on the application of the rent control.

As a consequence, it is the landlord’s obligation to obtain information as to whether a property he wishes to rent out falls within the scope of application of the rent control and how much the local reference rent is. Otherwise unpleasant surprises may lie ahead. If you have any legal question regarding your property, please do not hesitate to contact our experienced team.

Decision of the local court of Munich of 09/08/2016, 422 C 6013/16

Continue reading:
Termination due to outstanding rent even after longer period of time

Boris Piekarek

Attorney Boris Piekarek specializes in developing legal and fiscal wealth concepts and selecting legal forms for companies, real estate owners, and wealthy individuals. His key competency is optimizing wealth management in view of all aspects of real estate law, corporate law, and tax law.

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