The German Federal Cabinet approves the second round of tenancy law – the 5 changes that affect y...

About this video

• Video Title: The German Federal Cabinet approves the second round of tenancy law – the 5 changes that affect y...
• Channel: Tobias Claessens
• Speakers: Tobias Claessens
• Duration: 00:07:08

Overview

This video discusses the recent approval of the second part of Germany's tenancy law by the Federal Cabinet, detailing five key changes that impact landlords and tenants. It aims to clarify what the new legislation means in practice, which strategies may become obsolete, and what actions property owners should consider.

Key takeaways

• New Tenancy Law Package: The German Federal Cabinet has approved the second part of a new tenancy law package, affecting approximately 5.5 million private households. This follows the first part, which included an extension of the rent brake until December 31, 2029.
• Changes to Furnished Rentals: The rules for furnished rentals have been tightened. The "furnishing surcharge" must now be itemized separately in the rental agreement, and its calculation is based on either 10% of the net cold rent for fully furnished apartments or a time-value calculation of the furniture. If not properly itemized, the apartment is legally considered unfurnished.
• Short-Term Rental Limits: Contracts for short-term rentals are now limited to a maximum of six months, with a one-time extension option for up to eight months.
• Index Rent Adjustments: For index-rent agreements, rent increases linked to inflation above 3% will now only be partially applied. For example, if inflation rises by 4%, the rent increase will be 3% plus half of the remaining 1% (i.e., 3.5%). This means landlords can no longer pass on the full inflation rate.
• Modernization Costs Threshold Increased: The threshold for simplified procedures for passing on modernization costs has been doubled from €10,000 to €20,000 per apartment. This aims to make energy-efficient renovations easier and more achievable.
• Impact on Housing Market: The video suggests that these regulations, particularly in a market with a shortage of 1.4 million housing units, may not incentivize new construction and could lead capital to shift to other real estate sectors, potentially exacerbating the housing shortage and increasing rental pressure.