Rent increase up to the comparative rent: requirements and structure of the letter

What the rent increase under § 558 BGB is

The rent increase up to the local comparative rent under § 558 BGB is the statutory route for adjusting an ongoing rent within an existing tenancy to the local rent level. Unlike with a new tenancy agreement, the landlord cannot unilaterally set the higher rent but can only demand the tenant's consent to the increase.

The decisive factor is the local comparative rent. Under § 558 para. 2 BGB it is formed from the usual rents that, in the municipality, have been agreed or changed over the last six years for housing of comparable type, size, fittings, condition and location – including the energy efficiency standard. Up to this limit, and no further, the rent can be raised.

Important for classification: this concerns exclusively increases within an ongoing tenancy. The permissible rent level when concluding a new agreement is a separate question and, in tight markets, is governed by the rent control brake (Mietpreisbremse).

Requirements: waiting period and blocking period

Before a rent increase request can even take effect, two time limits from § 558 para. 1 BGB must be observed:

• 15-month waiting period: At the point at which the increase is to take effect, the rent must have been unchanged for 15 months.
• One-year blocking period: The rent increase request may be asserted at the earliest one year after the last rent increase.

In practice this means: the letter can reach the tenant at the earliest after twelve months of unchanged rent; the increase then takes effect only after a further number of months have elapsed, so that at the time of effectiveness the 15 months are fulfilled.

Increases due to modernisation (§ 559 BGB) and adjustments of operating costs (§ 560 BGB) are expressly not counted when calculating these deadlines. An interim modernisation surcharge therefore does not block the next comparative-rent increase.

Capping limit: 20 or 15 percent

Even if the local comparative rent is higher, the capping limit under § 558 para. 3 BGB restricts the jump. It is a second, independent ceiling and must be observed in addition to the comparative rent.

• General rule: The rent may increase by no more than 20 percent within three years.
• Tight markets: In areas with a strained housing market the limit drops to 15 percent in three years, where the respective federal state has designated these areas by statutory ordinance.

Both limits apply side by side: the new rent may exceed neither the local comparative rent nor the capping limit. The lower of the two is decisive. With the capping limit too, modernisation and operating cost increases are disregarded.

Justification: four permissible means

The request must be justified under § 558a BGB – and indeed with one of the means of justification provided for by law. § 558a para. 2 BGB names four options:

• Rent index (Mietspiegel) (simple or qualified rent index of the municipality): here the dwelling is classified by year of construction, location, size and fittings into the appropriate table field.
• Information from a rent database that shows a rent for comparable dwellings.
• Expert report by a publicly appointed and sworn expert, provided with reasons.
• Three comparable dwellings: naming at least three comparable dwellings with their rents; for identification they must be designated so specifically that the tenant can verify them.

It is sufficient to use one of these means properly. A special rule applies to places with a qualified rent index: if it contains data for the dwelling, this must be communicated under § 558a para. 3 BGB even when the increase is based on another means of justification.

Form, consent and the tenant's deadlines

The rent increase request must be declared to the tenant in text form under § 558a para. 1 BGB. A letter, fax or email is thus permissible; a handwritten signature is not mandatory, but a purely verbal declaration is not sufficient. The request must be addressed to all tenants who signed the agreement.

The tenant does not owe the higher rent automatically – they must consent. Clear deadlines apply to them under § 558b BGB:

• Consideration and consent period: The tenant may consent up to the end of the second calendar month after receipt of the request.
• Due date: If they consent, the increased rent is payable from the start of the third calendar month after receipt.

If the tenant does not consent, the landlord can sue for the granting of consent. This action must be brought within three further months after the end of the consent period (§ 558b para. 2 BGB). If the landlord misses this deadline, the specific request is no longer enforceable and must be made anew – again observing all deadlines.

Distinction: modernisation, graduated and index rent

The comparative-rent increase under § 558 BGB is only one of several routes. It must be cleanly separated from other types of increase:

• Modernisation rent increase (§ 559 BGB): After a modernisation the landlord can increase the annual rent by 8 percent of the costs incurred. There is a separate cap for this: the monthly rent may increase by no more than 3 euros per square metre within six years, or by no more than 2 euros where the initial rent is below 7 euros per square metre. This increase runs independently of § 558 BGB and follows its own rules.
• Graduated rent (§ 557a BGB): Here the future rent stages are already fixed in amount in the agreement; each stage must apply for at least one year. During its term an additional increase under § 558 BGB is excluded.
• Index rent (§ 557b BGB): The rent is linked to the consumer price index of the Federal Statistical Office; the adjustment is made in text form, and the rent must each time have remained unchanged for at least one year. A parallel increase up to the comparative rent under § 558 BGB is not possible during the index rent; only the index adjustment remains permissible, as may a modernisation surcharge in certain circumstances.

Only after a graduated or index rent agreement ends do the general rules of § 558 BGB apply again.

Checklist: components of a correct letter

Instead of copying out someone else's template, landlords should check that their letter contains all the substantive mandatory components. A correct rent increase request under §§ 558, 558a BGB should cover the following points:

• Clear addressing to all tenants named in the tenancy agreement.
• Clear designation as a consent request for increasing the rent up to the local comparative rent under § 558 BGB.
• Previous and new rent with specific amounts as well as the increase amount (usually the net cold rent).
• Date from which the increased rent is to apply – observing the 15-month waiting period and the tenant's consent period.
• Proof of the capping limit: demonstration that the increase does not exceed 20 or 15 percent in three years.
• Justification with a permissible means (rent index, rent database, expert report or three comparable dwellings) and a comprehensible classification of the dwelling.
• Reference to the consent period of the tenant up to the end of the second calendar month after receipt.
• Text form (letter, fax or email) and a provable receipt.

If a mandatory component is missing or the justification is formally inadequate, the entire request can be invalid. This is precisely where careful preparation pays off.