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HOUSING

How Germany is reforming its rental law in favour of tenants

Starting next year, tenants in Germany won't have to fear so many drastic mark-ups after modernizations of their flats, and will be better able to rebuke price increases.

How Germany is reforming its rental law in favour of tenants
Flats to let in central Munich, one of the areas most affected by rental increases. Photo: DPA

They should also be able to defend themselves more easily against exorbitant rents – as Germany’s controversial Mietpreisbremse (rental control law) is to be improved accordingly. The law, enacted in the summer of 2015, set a cap for how high landlords in urban areas in Germany could charge above the so-called Mietspiegel, or rental average.

The coalition factions Christian and Social Democrats (CDU/CSU) and Social Democrats (SPD) agreed on a compromise on tenancy law, which the Bundestag wants to put into law on Thursday. Rents, especially in large urban areas in Germany such as Berlin, Hamburg and Munich, have risen massively in recent years.

SEE ALSO: What Germany is doing to keep rents down: special report

The rules, according to which landlords may allocate a part of the costs to tenants after modernizations, are to be tightened. Nationwide landlords may reclaim annually only eight instead of 11 percent of the costs from their tenants that they can now, to cover the costs of repairs or refurbishings to a flat.

The trend of “modernizing out” has been regarded as a major problem in the housing market – for example, when an apartment is luxuriously renovated and tenants can no longer fork down the higher rent.

“The situation, especially in large urban areas, is serious,” said Minister of Justice Katarina Barley (SPD). Young families and single parents in particular have great problems finding affordable housing in so-called conurbations, or vast urban regions comprised of a number of cities and large town, she added.  

The planned capping limit of three euros permitted rent increase per square meter of living space within six years after modernizations remains – but the law will be tightened: Where the rent amounts to less than seven euros per square meter, landlords may only add on an additional two euros per square meter within six years. 

SEE ALSO: Tip of the week: When can my landlord raise my rent?

Reforming the rent index

The current law states that the rental price can only be set at ten percent higher than the so-called Mietspiegel in certain cases – for new buildings, renovations or if the previous rent was already higher one year before the end of the tenancy.

Yet under the new regulations, set to go into effect on January 1st, 2019, tenants should now be able to see more easily why they pay more than previous tenants. If a landlord demands more, he will have to inform the tenant of this before the contract is concluded and state a reason – this was not the case until now.

If the tenant thinks that his landlord is asking too much, it should be easier in future to object, said a speaker of Barley.

The renter is now allowed to rebuke the landlord if the raise in rent is not reasonably justified. The landlord in turn will be obligated to state a reason before making an increase. If the renter still is not sure if the increase is justified, he or she can seek the council of the local Mieterverein, a renter's association which offers legal advice for minimal fees.

SEE ALSO: How to join a Mieterverein (renter's association) in Germany

The previous Grand Coalition introduced the Mietpreisbreme or rent price brake. It applies in regions with a tense and overcrowded housing market, which are determined by the federal states. Yet the law quickly proved to be ineffective – partly because tenants usually did not know how much their predecessors had paid.

“It has always been important to the union that people are not driven out of their traditional residential areas because they can no longer afford their rent,” said SPD Union tenancy law expert Jan-Marco Luczak.

However not everyone was satisfied with the the new legislation changes. Free Democratic  (FDP) member of parliament Katharina Willkomm said that the rent brake was fundamentally unsuitable for tackling the causes of the rent increase and that new residential construction was necessary.

Axel Gedaschko, President of the German Housing Industry Association, felt it would restrict rentals from receiving the refurbishings they needed. “An additional restriction for modernization – and this again especially for landlords with low rents – is completely counterproductive and jeopardizes the future viability of housing in Germany.”

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RENTING

EXPLAINED: How to sublet your apartment in Germany

If you’re going away for a period of time or want to cut your living costs, subletting your flat can seem like an appealing option. But there are a lot of things you need to consider first. We break them down.

EXPLAINED: How to sublet your apartment in Germany

What is subletting?

A subletting arrangement is when a subtenant is allowed to use the main tenant’s apartment, or part of it, in return for payment.

Having visitors in your home, even for a period of up to six weeks, does not count as subletting and you do not have to inform your landlord. But be careful: If the visitor starts paying rent, this becomes a sub-letting arrangement and if the visitor stays more than six weeks in a row, you have a duty to inform your landlord.

READ ALSO: The most expensive (and cheapest) cities in Germany to rent a room

If close family members such as parents, children, partners or spouses move in with you, this is also not a subletting arrangement and is considered part of the normal use of the rented property. 

However, you should inform your landlord of such a change in circumstance, not least because at some point the new person living in your apartment will at some point need to register with the local authorities.

Do I have to tell my landlord?

Yes. Regardless of whether you are just subletting a room or your whole apartment, you have to inform your landlord and, in most cases, you are required by law to obtain the landlord’s permission to sub-rent. This applies for whatever time period you want to sublet for: whether it’s for a weekend or for six months. 

One exception to this rule is if you rent a room in a WG (shared accommodation) and all of the tenants are equal parties to the contract. In that case, it’s possible to sublet individual rooms without having to get permission from the landlord, but you should still inform them.

If you try to rent out your place or a room without your landlord’s permission and get found out, you could face legal action, or be kicked out of your apartment before the agreed notice period. 

READ ALSO: REVEALED: The most – and least – popular landlords in Germany

Can the landlord refuse to let me sublet?

If the main tenant has a so-called “justified interest” in subletting part of the apartment, they can demand that the landlord agrees to the sublet and even take legal action or acquire a special right of termination of the rental contract if they refuse.

However, this right only applies to a sublet of part of the apartment and not the entire space within the four walls – in this case the landlord is within their rights to say no to the sublet. 

When subletting part of an apartment, a justified interest must be for an important reason such as a needing to move abroad temporarily for a job or personal reasons, or a partner moving out and the tenant no longer being able to cover the rental costs alone.

In general, landlords shouldn’t refuse your request to sublet unless there are good reasons – for example if the apartment is too small. 

The landlord can’t reject your subletting application without good reason and if they do, you can gain a special right to terminate your rental contract, and can even sue for your right to sublet. 

What information will I need to give my landlord? 

Whether you are subletting a room or the whole apartment – you’ll need to give your landlord the following information:

  • Who is moving in
  • How long you will be subletting for
  • For what reason you plan to sublet

If you want to set up a WG (Wohngemeinschaft or shared flat) as the main tenant, you should discuss this with the landlord beforehand, as it may be worth changing the apartment status to a shared apartment in the main rental agreement. That way, you won’t have to send a new application every time a new roommate moves in.

Do I need a special rental contract?

If you are going to subrent your apartment, it is definitely worth having a contract. 

A contract between the main tenant and the subtenant is completely separate from the contract between the main tenant and the landlord, so all responsibilities arising from the sub-rental contract will fall on you and not the landlord. 

A man fills in the details of a rental contract by hand. Photo: picture alliance / dpa | Armin Weigel

At the same time, as the main tenant, you will still be liable to your landlord for any damage caused by the subtenant, so it is best to put a clause in the sub-rental agreement that outlines how this will be covered, and also to make sure that your subtenant has personal liability insurance. 

There are plenty of websites that offer templates of sub-rental contracts for you to use, and you should make sure your contract includes the following information:

  • The personal details of the subtenant
  • The sub-rental cost and any service charges
  • When these are to be paid
  • Which rooms may be used
  • How many keys have been handed over
  • Details of a possible deposit
  • The condition of the rented apartment
  • House rules, such as no smoking, pets, etc.
  • Liability for possible damages

How much can I charge?

You can usually negotiate the sub-rental price yourself, but you should be careful not to overstep the rental limit per square metre for your area. If you charge over this amount and your subtenant finds out, they have the right to demand the local square metre rental price and you may have to refund them the total amount of overcharged rent.

If you sublet a furnished apartment, you can add a surcharge based on what you will be leaving in your apartment. You should also factor in the energy and water costs.

READ ALSO: Everything you should know about renting a furnished flat in Germany

Do I have to get consent from the local authorities?

In some cases, you will also need to get permission to sub-rent from the local authorities to rent out your place. 

If you sublet in Berlin or Frankfurt, for example, and you want to advertise your flat for holiday rentals, you have to get approval first.

A wooden judge’s hammer lies on the judge’s bench in the jury courtroom in the Karlsruhe Regional Court. Photo: picture alliance / Uli Deck/dpa | Uli Deck

If you go ahead and rent on a site like Air BnB without approval, you can expect to pay a hefty fine. Though the highest possible fine of €500,000 is unlikely, there are numerous reports of people getting fines in Germany of several thousand euros.

Another important thing to remember is that, if you make more than €520 profit in a year from sub-renting, you have to include this in your tax declaration.

Can the landlord demand I pay extra?

If a landlord allows subletting, they can also demand a share of the extra income from the main tenant. The amount of the surcharge cannot exceed 25 percent of the sublease, however.

Useful Vocabulary

to sub-let – Untermieten 

sublease agreement – (der) Untermietvertrag

termination without notice – (die) fristlose Kündigung

ban on misuse – (das) Zweckentfremdungsverbot

special right of termination – (das) Sonderkündigungsrecht

justified interest – (das) berechtigtes Interesse

personal liability insurance – (die) Haftpflichtversicherung

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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