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RENTING

How people in Germany are struggling with rent hikes

Germany's extremely high inflation rates are causing headaches for tenants whose monthly rent is linked to the Consumer Price Index (CPI).

People look at a flat in Munich.
People look at a flat in Munich. Some tenants sign contracts which have rent increases linked to the consumer price index. Photo: picture alliance/dpa | Tobias Hase

Inflation in Germany recently hit a 40 year high at 7.4 percent – and experts warn it will increase further. 

Along with soaring energy prices, many everyday grocery staples, like milk and bread, have gone up in price significantly. 

But some tenants in Germany face another hurdle – rents that are linked to inflation. 

Some landlords or property companies include clauses in contracts for the cost of rent to go up. They can include a Staffelmiete (stepped rent) which means the rent increases gradually over time (but there are limits).

An Indexmiete (index rent) clause in rental contracts means the rent is based on the Consumer Price Index set by the Federal Statistical Office (Statistisches Bundesamt) and may be increased in line with the cost of living in Germany. The rent increase can happen once per year.

READ ALSO: Why tenants in Germany could see bigger rent increases this year

Given the strong competition for housing in many of Germany’s cities, such as Munich and Berlin, tenants often sign contracts despite the rent hike clauses. 

But nobody could have predicted how bad inflation would get this year. Energy prices in particular have rocketed since Russia’s brutal invasion of Ukraine which started on February 24th.

Now some tenants’ associations in Germany are demanding that Index-linked rents be capped. 

The need for advice on index-linked leases is increasing, Anja Franz, lawyer and spokeswoman for the Munich Tenants’ Association, told regional broadcaster BR24.

In the past years – when inflation was very low – rents like this only ever rose by one to two percent, and tenants had very few problems with this. At the moment, however, tenants are facing increases of 7 to 10 percent on their monthly rent.

Adding to the problem is that landlords who have not increased the Indexmiete in the past years can add the inflation rates from that time on top of current hikes – creating huge increases. 

However, landlords can also choose to wait to increase the rent, and only refer to the index figures published by the Federal Statistical Office next year or the year after.

READ ALSO: Altbau vs Neubau: What’s the difference and which should I rent in Germany?

What’s happening in Bavaria?

Bavaria is known for having some of the most expensive rents in Germany.

In many Bavarian cities and districts, landlords are likely to use the options available to them to increase rents, according to Rudolf Stürzer, chairman of the Haus und Grundbesitzerverein (House and Landowners Association) München. That’s because up until now index rents haven’t been lucrative for landlords. In the last 10 to 15 years, the index rose much slower than the market rent. Now that’s changed.

The Mieterverein München (Munich Tenants’ Association) advises those affected to first check whether the calculation is correct when they receive notice of a rent increase from their landlord or housing company.

Furthermore, tenants should check the time interval since the last rent increase. A waiting period of at least one year from the previous rent increase applies.

A man hangs up his keys in a Berlin apartment

A man hangs up his keys in a Berlin apartment. Photo: picture alliance/dpa/dpa-Zentralbild | Kira Hofmann

In principle, tenants who have signed an index-linked rent are bound by this clause. If the landlord demands an effective rent hike, it must be paid.

The Munich Tenants’ Association estimates that three to five percent of its members have index-linked tenancy agreements. In the past, the association even advised that people to sign these contracts – but now they advise against it.

The Haus und Grundbesitzerverein believes that index-linked rents have already been agreed for two-thirds of all new contracts in Munich.

The tenants’ association says index-lined agreements become a bigger problem when the initial rent set is already high. 

They are calling for specific legal upper limits for index-linked rents to be set in Germany to avoid overburdening tenants.

Under standard tenancy agreements rents can rise by no more than 20 percent over three years. In Frankfurt am Main and other places were the rental market is competitive, this cap has been reduced to 15 percent.

The traffic-light coalition wants to reduce this further to 11 percent nationwide, which would mean an increase of less than four percent per year.

The German Tenants’ Association (DMB) also recently slammed the fact there are no cap limits for index-linked rents.

Lukas Siebenkotten, President of the German Tenants’ Association (DMB), told DPA in April that a regulation like this for index-linked tenancy agreements “would be a sensible remedy” to protect renters 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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