What does Mietpreisbremse mean?

What is "Mietpreisbremse"?

Wordy translated means „Mietpreisbremse“ rental-price-brake. Other English words for this German law are „rent control“, „rental cap“ or „law for a cap of rent increases“. 

The German government stepped in, to reduce the enormous increase of the rent prices of apartments in Germany.

"Mietpreisbremse" is a law to control an enormous increase of rental prices of apartments in Germany.

By the Mietrechtsnovellierungsgesetzes from April 21th 2015 in German Civil Code „Buergerlichen Gesetzbuch“ it was determined via §556d BGB: the German government is allowed to control the rent price of apartments in “specific selected areas”. (German word: "Festgelegte Gebiete")

What was the Mietpreisbremse regulation?

Each of the 16 states in the German republic were obligated to define regions, communities and cities = “specific/specificaly selected area”, in which this law should be applied. Rent prices of apartments which are located within this specific selected area cannot extent beyond 10% of the ”local comparable rent/local market price”  (§558 Absatz 2 BGB). 
Constraint: this law affects apartments, which were first-time in use before 01 October 2014. Buildings built after 01 October 2014 shall be excluded from this government intervention.

What is “local comparable rent” and where are these “specific selected areas”?

Each federal state defined this „specific selected area" by following criteria: 

• strong increase of rent prices (market rent price)
• high demand of flats leading to a low number of empty flats
• increase of population exceeds the number of available new flats

In Baden-Wuerttemberg, 68 areas including Stuttgart, Sindelfingen, Filderstadt, Ulm, Reutlingen, Fellbach, Heilbronn were designated.

Landlords having apartments in these areas are not allowed to take rent for new contracts more than 10% of the identified “local comparable rent price/local market rent price”.

The “local comparable rent price” is written down in the so called “Mietspiegel” (current rent index), which is published every year by the local government.
It shows for each area or district the rent costs in (€/m2) based on statistical analysis and survey.

Example: 

According to the Mietspiegel in Stuttgart, published in 2015, the rent per square meter for an average apartment was 8,44€/m² Kaltmiete in Stuttgart-West. Kaltmiete means the rent for an apartment exclusive of heating and other additional costs. Thus the maximum rent costs for average apartments in Stuttgart West was 8,44€+10%=9,28€ Kaltmiete per square meter, according to Mietspiegel.

Was there any exception for the rent-price limitation?

Closing new rent contracts, the landlords could exceed the allowed maximum rent-price, in case

1. the apartment was equipped with furniture
2. there was an increased rent-price already in the rent contract with the predecessor renter
3. an extensive modernization/refurbishment was done before 
4. it was a quite new apartment, means first time move-in was after 1^stOctober 2014
5. a special clause was written in the rent contract leading to an incremental rent-price increase (double contract)

What was the procedure in case the rent-price limitation was exceeded?

The tenant should take an immediate step into a legal action, when the rental price exceeds the price limit in the rental agreement/contract. 

So, it was necessary to ask for legal assistance by a tenant’s protection association or a lawyer. 
The tenant will lose the rights to get a rent adjustment or even a retroactive rent repayment, if the legal action is not taken.

How was the Mietpreisbremse in practice?

Based on our knowledge and experience in the practice of the Mietpreisbremse, we point out some problems as below:

• In case the tenant is an expatriate from overseas, he/she may not have a knowledge about this law and would not go into a process to file a case

• The tenant does not need to take a step to file a case if he/she complained to the landloard before signing the contract

• Very high rental prices were already agreed for most apartments before the introduction of the Mietpreisbremse in 2015.
  Rents between € 12 / m² and € 14.50 / m² were quite normal in Stuttgart
• Since it was necessary to take legal steps immediately after the conclusion of the contract, the new tenancy began with a legal dispute.
  That’s definitely not a base for a good relationship between landlord and tenant
• It is difficult for the new tenant to get information about the conditions of the previous tenancy before signing the contract.
  In addition, the risk of a long litigation and losing the process is very high

• Basically, the values ​​given in the rent index Mietspiegel, seem far from reality. The numbers are created through "sample survey" and have a political motive

What has changed since Mietpreisbremse measures tightened in 2020?

The text of the German civil laws BGB §556d and §556g has been changed since March 19, 2020. In Baden-Württemberg there was an ordinance, which became valid from November 1, 2020. Here are the changes: 

• the rental price control period by the government has been extended to 2025.
• the specific selected areas in which the Mietpreisbremse is applied has been increased from 68 to 89 in Baden-Württemberg
• a clause has been inserted that the landlord must provide information about the agreement of increasing rent price with the predecessor without being asked before submitting the contract
• a retroactive reimbursement of the overpaid rent can take place up to a maximum of 30 months