Understanding the rent freeze and setting the optimum rent
Many landlords face challenges when it comes to setting rents. The rent cap in particular is causing uncertainty. But with a little know-how and a structured approach, you can find the optimum rent. We have summarised the most important aspects for you.
1. does the rent freeze apply to your property?
The rent freeze does not apply everywhere. It currently affects around 300 of more than 11,000 municipalities in Germany, primarily urban centres and their surrounding areas. You should therefore check whether your property is located in an affected municipality. You can find information on this online or from the relevant authority. A property expert or estate agent can also provide you with certainty.
2. local comparative rent and rent index
The rent freeze stipulates that the rent may not exceed the local comparative rent by more than 20 %. This is based on:
- Criteria such as: Type, size, location, condition and equipment of the property.
- Rent index: Provides information about the usual rents in your region. However, rent indices are not available in all municipalities and may be out of date.
- Market rent: If no rent index is available, base your decision on supply and demand.
3. a realistic rental price
If the rent is too high, your flat may remain empty for longer and you will have to pay service charges. Instead, look for a fair market price that is attractive to tenants. An estate agent can help you determine the optimum price and find suitable tenants to secure long-term tenancies.
4. optimisations and rent increases
Despite the rent cap, rent increases are possible if you raise the standard of the property. Examples:
- Installation of modern heating systems or underfloor heating.
- Laying high-quality floor coverings such as parquet.
- Creation of additional car parking spaces or storage rooms.
The rent cap does not apply to extensive modernisation work that accounts for at least a third of the value of a comparable new-build flat. However, check whether your property is subject to milieu protection, as this may impose restrictions on modernisation work.
Conclusion: Expert advice for optimal rental prices
Setting a realistic and legally compliant rental price requires experience and market knowledge. An expert can help you to minimise risks and find the right price for your property.
Get non-binding advice now
Robert Schüßler
Property valuer (EIA and IHK)
Note: This text is for information purposes only and does not constitute legal or tax advice. Please consult an expert if you have individual questions.
