BGH ruling: Requirements for rent increase declarations

The German Federal Court of Justice (BGH) has now clearly formulated the requirements for rent increases after modernization work has been carried out. The ruling supports landlords in adapting the old housing stock to the current requirements of climate change and energy supply.

Rent increases rarely meet with unanimous approval. Many landlords therefore only increase the rent when there is a change of tenant. Rent increases after modernization measures are met with particular criticism. Many end up in dispute in court.

In the current cases before the BGH, the plaintiffs are each tenants of apartments in Bremen. The landlord increased the basic rent as a result of modernization of the apartments and the building. The rent increase letter contained an annex with details of the individual modernization measures, the total costs incurred in each case and the apportionable share of modernization costs. The share of maintenance costs was deducted from the total costs. The rent increase resulting from the calculation was included in each case.

The tenants objected to the rent increase declarations on formal grounds. They wanted to have the landlord's entitlement to payment of the increased rent revoked by the courts and demanded repayment of the rent they believed had been overpaid.

The Federal Court of Justice (BGH) has ruled that it is sufficient to meet the formal requirements of Section 559b (1) sentence 2 of the German Civil Code (BGB) if a landlord shows the costs incurred as a total sum and indicates the maintenance portion included. A breakdown of the total costs according to the individual trades is not necessary. The tenant should be able to check the reason and scope of the rent increase for plausibility.

Excessive formal requirements could lead to justified rent increases not being enforced or therefore possibly not even being started. Moreover, tenants have a comprehensive right to information and inspection.

(Photo: © Federal Court 2022)