Tenancy Law 2026: What landlords need to know now about new obligations and opportunities
2026 will be a pivotal year for landlords. A number of statutory requirements are due to come into force, many local authorities are updating their qualified rent indices, and energy efficiency regulations will have a direct impact on service charges, lease terms and returns. Planning ahead helps to prevent conflicts and allows landlords to make the most of the benefits of modernisation. Below are the key points – precise, practical and accompanied by specific checklists.
1) Heating Costs Regulation: Remote meter reading by the end of 2026 and monthly consumption information
Under the amended Heating Costs Ordinance (HKVO), newly installed metering devices have been required to be remotely readable since 2021. For existing meters, the deadline is fast approaching: by 31 December 2026, any replacement meters must be fitted with remote-reading technology. Furthermore, if meters are remotely readable, tenants must monthly consumption details be made available (e.g. via a portal or by email).
- Practical tip: Check the metering equipment for each unit (heat cost allocators, heat meters, water meters) now. Group replacements within a single property to reduce installation and call-out costs.
- Contract check: Amend service agreements with metering service providers (interoperability, data security, notice periods, eligibility for cost allocation).
- Communication: Let tenants know in good time how they can access their monthly data. Transparency significantly reduces the number of enquiries regarding utility bills.
Quick check: Remote readability (2026): Is there at least one heating or water meter in the property that cannot be read remotely? The next time it is replaced, a remotely readable meter must be installed. Is monthly data available? If so, send it out regularly; if not, require the metering service to provide automated reports.
2) Allocating the cost of CO₂: sharing fairly, avoiding conflicts
From 2023, CO₂ costs for heating energy will be shared gradually between landlords and tenants – depending on the building’s energy performance. Lower energy efficiency results in a higher share being borne by the landlord. This tiered model will remain in place in 2026. Landlords must take the energy standard (e.g. final energy demand/consumption) into account in the heating bill and correctly state the allocation.
Sample calculation (simplified assumption): Annual CO₂ costs: 480 euros. The building is in the middle tier; the landlord’s share is 50 per cent. Result: 240 euros payable by the landlord, 240 euros payable by the tenant. If energy efficiency improvements are made (e.g. insulation, hydraulic balancing), the rating may improve – reducing your share of the costs in the long term.
Common mistakes and solutions relating to CO₂ costs:
- Error: A flat-rate charge passed on to the tenant without a means test. Solution: Determine the level based on the building’s energy performance rating and record this in the statement.
- Error: Lack of supporting evidence for the classification. Solution: Please enclose the energy performance certificate and consumption data, and note the method of calculation.
- Error: No adjustments following modernisation. Solution: After refurbishment, reassess the level and apply it the following year.
3) 2026 Rent Index: Basis for rent increases and the drafting of tenancy agreements
Under the Rent Index Reform Act, qualified rent indices must be updated regularly (usually every two years). In 2026, many local authorities will be updating their data sets. As a result: Rent increases under Section 558 of the German Civil Code (BGB) should be on the valid The rent index must be supported by evidence and formally and properly justified.
- Documentation: Objectively record the property’s features (year of construction, location, level of modernisation, quality of living). Document any deviations from the standard (photographs, reports, invoices).
- Please note the cap limits: In many towns and cities, a lower cap applies (15 per cent over 3 years). Please check the local regulations.
- Rent control: Extended until 2029 in several federal states (as at the end of 2024). It will continue to apply in many places in 2026 – carefully check for exceptions (e.g. extensive modernisation, new builds).
Index-linked and graduated rents: When inflation was high, the index-linked rent was attractive to landlords, but it can lead to increased tenant turnover. A moderate graduated rent smooths out cash flows and makes it easier for tenants to plan. Key decision-making criteria: property location, demand, target tenant group and maintenance strategy.
4) Modernisation 2026: cost allocation, funding, return on investment
Modernisation levy: Up to 8 per cent of the costs incurred are chargeable to tenants, subject to a cap (e.g. 2 or 3 euros per square metre over a period of six years, depending on the initial rent). It is important to make a clear distinction between maintenance (not chargeable to tenants) and improvements (chargeable to tenants).
Promotion: The Federal Funding Scheme for Energy-Efficient Buildings (BEG, KfW/BAFA) is expected to remain the main point of contact in 2026 as well. Terms and conditions change regularly; the combination of a grant and a low-interest loan can significantly reduce the net cost. Assumption: Funding budgets will remain available, but political priorities may shift – so apply early.
- Calculation method: Investment of 120,000 euros, eligible grant of 15 per cent = 18,000 euros. Allocable portion (assumed to be 60,000 euros) × 8 per cent = 4,800 euros per annum. For 600 m² of living space, this equates to 0.67 euros/m²/month – please check local cap limits.
- Heating planning: Large cities will have local heating plans in place by 2026. Before replacing your heating system, check whether a district heating connection is likely – this will influence your choice of technology and funding options.
Avoiding mistakes – here’s how:
- Error: Combining maintenance and modernisation on a single invoice. Solution: Keep trades strictly separate, clearly label items, and file supporting documents.
- Error: Tenant information received too late. Solution: A written notice in accordance with Section 555c of the German Civil Code (BGB), submitted within the prescribed time limit and containing reliable figures, a timetable and the expected savings.
- Error: Funding application only after the contract has been awarded. Solution: Always apply before commissioning the work, otherwise you risk being excluded from funding.
5) Opportunities through professionalism: fewer vacant properties, greater legal certainty
In 2026, markets will reward clarity. Those who not only fulfil their obligations but also demonstrably exceed expectations will position their property favourably in the competitive landscape. Three high-impact levers:
- Transparent service charges: Monthly consumption reports help to reduce objections during the billing period. Include a brief annual summary (consumption, proportion of CO₂ costs, measures taken at the property).
- Value-based tenant selection: Credit checks in line with the GDPR, clear house rules, and a handover report with photographic evidence. This reduces disputes and improves payment reliability.
- Contractual clarity: Clear rules on cosmetic repairs, keeping pets, subletting and structural alterations. Have outdated clauses reviewed by a lawyer on a regular basis.
Our conclusion: Tenancy Law 2026 is not a stumbling block, but an opportunity for professionalisation. With remotely readable metering technology, a clear CO₂ cost structure, rent increases in line with the rent index, and smart modernisation planning, landlords can improve predictability – and thereby increase the value of their property portfolio.
Would you like to see where your property will stand in 2026? We analyse rent indices, consumption data, modernisation potential and lease agreements – with precision, discretion and a focus on results. Arrange an initial consultation now
