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Housing estate in Berlin-Spandau
Photo: Sabine Gudath / IMAGO
Two weeks ago, the boss of the European housing group Vonovia gave a lot of information.
If inflation picks up, says Rolf Buch, quite unperturbed, rents will of course have to rise as well.
His group, the largest private landlord in Germany with more than half a million apartments, was not the first to attract attention.
Only last year he took over the competition from Deutsche Wohnen - and thanks to a tax-saving model he didn't even have to pay real estate transfer tax.
In contrast to normal house and apartment buyers, housing groups can usually save on real estate transfer taxes when buying.
Vonovia immediately saved one billion euros in taxes.
So now the next antisocial announcement: In times of crisis, the prospect of rent increases was not well received.
But what about rent increases?
The first astonishing finding on this comes from the Federal Statistical Office: According to this, rents without taxes have risen even less than other living costs in recent years.
Large city tenants will not confirm this, but the office even reports the figures separately for each federal state.
In fact, however, price increases also take place above all in the case of new rentals - in turn, there have been fewer recently in view of the lack of apartments and the resulting unwillingness of tenants to change.
In addition, the rental price brake seems to have an effect.
Different types of rent increases
In principle, there are two parts of the rent that can increase:
First and foremost, the net cold rent, i.e. the basic rent for the apartment you have rented.
Here, as a tenant, you will normally be asked to give your written consent to every increase.
And secondly, the advance payment for the additional costs.
So the costs for heating, garbage, property taxes, elevator and caretaker, which you pay up front and for which you get a statement once a year - and then usually either get a little money back or have to make an additional payment.
Net cold rents in existing leases must not simply increase.
First of all, they may only be increased again at the earliest 15 months after moving in or after the last rent increase.
And one limit applies to almost everyone: rents may not increase by more than 20 percent in three years, and in many cities not even more than 15 percent.
That is what is called "capping limit".
In addition, the rent may not normally rise higher than the local rent index provides for.
Such a rent index exists in most cities.
The rent index shows how rents have developed over the past six years in comparable apartments.
Where there is no rent index, the landlord must name three suitable comparable apartments in which the rent is so much higher that the rent increase seems justified.
If any of the rules are broken, the increase is illegal
Exceptions are two rarer types of leases.
Some tenants have signed a so-called graduated rental agreement.
Such a contract provides for the rent to be increased by a certain amount in euros at regular intervals.
The increase in these graduated rents does not have to be approved by the tenant each time, because the increases are already in the original rental agreement.
Graduated rents may even exceed the planned rent in the rent index.
more on the subject
Index contracts: How inflation becomes a trap for tenantsBy Henning Jauernig
Another model is the so-called index rents, which used to be common in commercial real estate.
The development of the rent level is based on the consumer price index, for example.
What was okay for tenants for many years because inflation was low is now boomerang, because high general inflation can now also result in strong rent increases.
And as much as inflation has risen overall in recent years if the landlord has not increased the rent for a long time.
Rental price brake with holes
High rent increases for new leases have long been a problem that governments want to mitigate, social democrats and the Greens with significantly more enthusiasm than the Union.
The keyword for this is the so-called rental price brake, which now applies to new rentals in more than 400 German cities.
It started in 2013 with university towns and metropolises, where some landlords were particularly tough on new leases.
In the meantime, the brake also applies in East German cities such as Leipzig or Dresden and in West German district towns such as Bocholt or Kleve in North Rhine-Westphalia.
The rental price brake states that new rents may not be more than ten percent above existing rents in the rent index.
If the existing rent for the apartment was ten euros per square meter according to the rent index, the landlord may not ask the new tenant for more than eleven euros.
However, there are exceptions that landlords have made good use of in recent years, including new construction, modernization or furnished rentals - and also the case that the previous tenant has already paid too much.
The different ancillary rental costs
Irrespective of the cold rent, the ancillary costs can also increase.
The landlord also announces this.
You don't have to agree, but you should at least check.
The ancillary costs include items that landlords and tenants cannot initially do anything about, such as property tax and street cleaning fees.
Then there are costs that the landlord can influence to some extent, for example building insurance or landlord liability or the provider of heating energy such as gas, oil or wood pellets.
The price differences between different energy providers can quickly amount to ten percent or more, and the right, modern heating system makes a real difference.
The question of how waste disposal is regulated is also one of the landlord's cost management options.
And then there are costs, where the landlord provides the framework, but a good part is determined by the tenants.
The main focus here is on the concrete costs for heating and hot water.
In rental agreements, 70 percent of these costs are usually settled based on the tenant's consumption, while 30 percent are based on the average consumption in the specific building.
The logic behind it is understandable.
If the apartment above you is heated and the apartment below you too, you no longer have to turn on the radiators yourself and it still stays reasonably warm.
You should at least pay this share.
Attention, heating cost explosion!
In view of rising heating costs, many tenants have to reckon with the fact that the landlord will demand a hefty back payment when the next utility bill is billed.
Heating costs had already risen sharply in 2021 and the federal government had pushed through a heating cost subsidy for recipients of housing benefit.
The situation has worsened with Putin's war in Ukraine.
The price of gas and heating oil have doubled in purchasing.
Some landlords may have already sent an increase in the monthly advance payments with reference to the increased heating costs.
If it is calculated correctly, it at least protects the tenant from high back payments in the next billing.
more on the subject
Rental basics: living for beginners by Sebastian Maas
Check the letter of increase in each individual case
You should check every rent increase, regardless of whether it is for the cold rent or for the advance payment of ancillary costs.
You can find a checklist here.
Many increases contain form errors and are therefore not valid at first, many are not justified, even if they comply with the form.
In a local evaluation at the end of the last decade, the Hamburg Tenants' Association found only a quarter of correct increases.
The simple test has two steps.
You check whether the increase does not contain any form errors, for example
all landlords have signed the rent increase,
the last increase was long enough ago, i.e. at least twelve months,
in the case of graduated rental agreements, the rent is to be increased by a specific euro amount and not by a percentage,
the correct index has been selected for index rental contracts.
And then check whether the increase can be correct in terms of content, for example,
that the rent is not increased beyond the limits of the rent index, the rent index provides for different apartment furnishings, for example, different maximum limits per square meter,
that the rent is not increased too quickly, i.e. that the so-called capping limits of 15 or 20 percent have been complied with in the past three years.
If you see errors, do not initially agree to the increase requests in standard rental agreements.
If the landlord made a formal error, he may change it in a second letter, and the rent increase will come anyway, but at least later.
If you refuse consent because of an error in content, the landlord may sue.
Then you should have your own legal counsel.
If you are a member, the tenants’ association will help you in court and also with the review of the rent increase letter.
There are also specialized legal service providers such as CONNY for the examination.
Always check additional cost increases
The same applies to increases in ancillary costs.
Here, too, the landlord can make formal errors, which then mean that you do not have to pay the increased additional costs for the time being.
If the landlord then misses the deadline one year after the end of the rental period, you do not have to pay back either.
But there can also be errors in content here, for example if garbage costs, repairs or caretaker costs were incorrectly billed.
According to experts, almost half of all utility bills are incorrect.
If you get a rent increase or a utility increase in the coming weeks, check carefully because a good portion of the increases are so flawed that they don't stand up to such scrutiny.
If the landlord doesn't agree, get legal advice.
It's easier and cheaper than you might think.
I wish you success!