Rent increase after change of ownership, rent above the local rent index.
July 22, 2009 | 20,00 EUR | answered by Dr. Dr. Danjel-Philippe Newerla
My husband and I acquired a condominium on May 1st of this year. The tenants have been living in this apartment for about 10 years and have not received any rent increases so far. The rent is currently slightly above the underlying rental index. Now we would like to increase the rent by 45 euros (about 4 percent).
The apartment is located in the best area of FFM, has about 100 square meters, and is a particularly exclusive apartment (2 balconies, 4-meter high ceilings, small residential unit, etc.). For this reason, and also because there has been no rent increase for 10 years, we would like to increase the rent by a total of about 4%. The old lease that we took over provided for rent increases of 2% in 2004 and 2005.
Now my questions:
- Are we allowed to increase the rent as part of the change of ownership, possibly referring to the lack of rent increases in 2004 and 2005 or in general as part of the change of ownership - even beyond the rental index?
- Can we terminate the tenants normally and are we bound by the deadlines of the lease and / or the German Civil Code (does a principle of favorability apply here)?
Dear inquirer,
Thank you for your inquiry!
I would like to address your questions as follows, taking into consideration your input and the facts presented:
1.) Can we increase the rent in the context of a change in ownership, possibly citing the lack of rent increases in 2004 and 2005 or in general due to the change in ownership - even beyond the rent index?
Whether a rent increase is permissible is determined according to § 558 of the German Civil Code (BGB), and specifically according to § 1 of this provision.
I have included this provision below for better understanding:
§ 558 BGB
Rent increase up to the local comparative rent
(1) The landlord can demand approval for an increase in rent up to the local comparative rent if the rent has remained unchanged for 15 months by the time the increase is to take effect. The request for rent increase can only be made at least one year after the last rent increase. Increases according to §§ 559 to 560 are not considered.
(2) The local comparative rent is determined from the customary fees agreed upon in the municipality or a comparable municipality for residential space of a similar type, size, amenities, qualities, and location in the last four years, except for increases according to § 560. Residential space for which the rent amount has been determined by law or in connection with a funding commitment is excluded.
(3) For increases under paragraph 1, the rent may not increase by more than 20 percent within three years, except for increases according to §§ 559 to 560 (cap limit).
(4) The cap limit does not apply when:
1. the tenant's obligation to make compensation payments under the provisions on reducing over-subsidization in housing due to the expiration of public obligations has ceased, and
2. the increase does not exceed the amount of the last compensation payment made.
The landlord may demand the tenant to provide information on the obligation to make compensation payments and their amount within one month at least four months before the expiration of public obligations. The same applies if the tenant's obligation to make compensation payments under §§ 34 to 37 of the Housing Promotion Act and the relevant state regulations has ceased due to the expiration of rent restrictions.
(5) Third-party funds as defined in § 559a must be deducted from the annual amount resulting from an increase to the local comparative rent, with 11 percent of the subsidy in the case of § 559a (1).
(6) Any agreement that deviates to the detriment of the tenant is invalid.
As you can see, according to § 558 BGB, an increase is generally only permitted up to the local comparative rent.
In your case, since the current rent is even above the rent index (see § 558 BGB), i.e., above the local comparative rent, a rent increase at this time is generally not possible.
However, you should periodically check the rent index in the future to determine if a rent increase is justified, as the current rent is below the (future) local comparative rent.
2.) Can we terminate the tenants under normal circumstances, and are we bound by the deadlines of the lease agreement and/or BGB (does the principle of favor apply here)?
Since the principle of "purchase does not break rent" applies, you have inherited all rights and obligations of the former landlord towards the tenants regarding the lease agreement.
This means that you can only terminate the lease agreement under very narrow circumstances, such as extraordinary (e.g., due to late payments, breaches of tenant obligations, etc.) or for owner occupancy.
I hope this provides you with a basic legal orientation and wish you much success and all the best!
I would like to point out the following:
The legal information I have provided is based solely on the facts you have provided. My response is only an initial legal assessment of the situation and cannot replace a comprehensive assessment of the facts. Adding or omitting relevant information can lead to a completely different legal assessment.
I hope that my explanations have helped you. Feel free to contact me through the follow-up option on this platform or via my email address.
I wish you a pleasant Wednesday afternoon!
Best regards,
Dipl.-Jur. Danjel-Philippe Newerla, Attorney at Law
Heilsbergerstr. 16
27580 Bremerhaven
kanzlei.newerla@web.de
Tel. 0471/3088132
Fax: 0471/3088316
