Rent adjustments: what should be considered?
One of the main points to look out for when searching for an apartment or house is, as you know, the expected rental price of the property that is favoured (assuming of course that one aims to rent). If you are a young student, for example, you will be well familiar with this factor, because money is tight and the time to do something about it, limited, and so the notion of one’s perfect rental apartment, or of even moving into a rented house at all, is scaled back accordingly. If, after a long search, the right property is found and all parties are satisfied with the condition and price of the property, then nothing will stand in the way of the move and your realisation of your new home. But what happens if the building management suddenly wants to change the price? How do you deal with this? Why should you even consider this as landlord at all? And from what point and to what extent is a rent adjustment justified?
What even is rent adjustment?
In general, this usually means increases (in rarer cases also reductions) of the basic rent (i.e. independent of ancillary costs) that occur after conclusion of the rental agreement. The reason for it is, of course, not malice. It is primarily either a question of the overall situation of the local rent index (i.e. the average price for a rental apartment or a rental house in a particular region) or about changes to the property, such as modernisation work. If there is no local rent index, a minimum of three comparative apartments is always necessary. It should here be noted that, in many properties (rented house, apartment block, etc.) certain apartments belong not to 'big business', but to private owners, who will then decide under given measures to increase the rent, because the building management has showed them how to do this. There is no real advantage in looking for such opportunities. It is also important to mention that a landlord or building manager can never demand a rent increase without the tenant's consent. However, they are not allowed to simply withhold their consent; rather, this is about checking whether the increase falls within the legal framework (time period, percentage increase, level compared to rent index). If they withhold consent without reason, the landlord can sue them.
When is a rent adjustment possible?
In some cases, the landlord sets an anticipated annual increase in the rental price even before the tenancy agreement is concluded. Such a planned rent increase is called graduated rent. The rent increase must here be shown in the form of a monetary amount; percentage adjustments are not legal. The rent can be increased every 12 months. The earliest possible increase in the rental price is therefore after one year. So you should pay attention to this in advance. If you have not done so, it would be advisable to contact the building management. If no graduated rent has been agreed, a rental increase can only be made after 15 months, at the earliest. For on top of the one-year waiting period, a two-month review/approval period for the tenant is added. It is accordingly advantageous for the tenant not to have rent increases structured in advance.
How much is the rent allowed to increase by?
The maximum permissible increase in the price of your rented apartment is determined on the one hand on the basis of the already mentioned local rent index, and on the other hand, by the so-called cap limit. According to the BGB, the cap limit stipulates that the increase in rent must not exceed a percentage of 15% within 3 years. Berlin is subject to a special regulation of 15% for areas with increased housing needs. Elsewhere, the cap is usually 20%. The cap limit even applies when the local comparative rent allows a higher rent. A more than 15% rent increase is therefore barely possible in Berlin. Apart from the special regulation of graduated rent, the landlord must agree the rent adjustment, as already mentioned. When choosing the graduated rent, the landlord can moreover raise the rent above the local comparative rent.
What else is there to know?
Certain exceptional cases that property managers can invoke invalidate some of the limitations explained above. When, as previously mentioned, the rent increase is set at the beginning of the contract (also called graduated rent), this is not tied to the cap limit, for example. Or the so-called index rent, which is based on the so-called price index, which is determined by the Federal Statistical Office. Always keep your eyes open before signing the contract for your rental apartment or rental house. As ever, this is not about mutual distrust, but simply to prevent unpleasant surprises and to ensure a pleasant tenant-landlord relationship.
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