Germany rental law reform advances as cabinet approves measures to curb rent circumvention
Germany’s rental law reform cleared the federal cabinet, proposing new limits on furniture surcharges, short-term lets and index-linked increases to strengthen tenant protections. The draft, tabled by Justice Minister Stefanie Hubig (SPD), targets common ways landlords have sidestepped the Mietpreisbremse and now awaits passage through the Bundestag. Lawmakers and tenant groups say the measures respond to rising rents that have left many households strained.
Cabinet backs draft to tighten rental rules
The cabinet adopted a bill designed to make it harder for landlords to circumvent rent controls and to increase transparency for tenants. The proposal must still be debated and approved by the Bundestag before becoming law, a process that could bring changes during committee review. Officials frame the package as a targeted update to federal tenancy law aimed at markets under particular pressure.
Rising rents fuel reform push
Data from the Kiel Institute’s Greix rent index showed offers for rental housing climbed 4.5 percent in the fourth quarter of 2025 compared with the prior year, underscoring the urgency behind the reform. Munich remains the country’s most expensive city for renters, with average cold rents near €23.35 per square metre, followed by Frankfurt at about €17.36. Policymakers argue those increases make clearer rules and stronger enforcement necessary for the roughly 44 million renters in Germany.
New transparency and caps for furnished flats
Under the draft, landlords renting out furnished apartments must explicitly state the monthly surcharge charged for furniture use, and that surcharge would be capped at 1 percent of the current market value of the furnishings. For fully furnished dwellings a separate flat-rate allowance of 10 percent of the net cold rent would be permitted if itemised; failing to itemise the furniture component would mean the unit is treated as temporarily unfurnished for rent-control purposes. The change is intended to prevent opaque markup practices and to give tenants a clear basis to challenge excessive charges.
Short-term contracts limited to curb abuse
The bill narrows the scope for short-term leases that have been used to sidestep rent limits by setting a general maximum duration of six months, with an eight-month ceiling when a longer need arises only after tenancy begins. The ministry notes that prior case law left the concept of “special reasons” vague, enabling some landlords to offer temporary contracts in situations where a long-term tenancy would have been appropriate. Critics warn that landlords might respond by chaining fixed-term agreements, while tenant advocates say the cap is a necessary step to push more apartments into longer-term, regulated rental stock.
Index rent increases partly constrained in tight markets
For districts where the rent brake applies, the draft limits how much consumer-price-linked index increases feed through to tenant rents. Specifically, only half of any index change that exceeds a three-percent threshold would count toward a rent adjustment in such areas. Applied to the inflation spike of 2022, for example, that mechanism would have reduced the effective pass-through of a near-seven-percent rise in consumer prices. Tenant groups argue the provision should go further, seeking bans on index rents for new lets or lower annual caps, while landlords’ representatives warn that curbs could squeeze owners facing rising maintenance and financing costs.
Repayment window expanded to avert ordinary terminations
The proposal extends the protective “grace” mechanism for tenants who fall behind on rent by allowing repayment to avert not only immediate extraordinary termination but also a subsequent ordinary termination. Tenants would be able to stave off both types of eviction by repaying outstanding rent within two months after receipt of an eviction claim, mirroring the existing Schonfrist for extraordinary discharges. The safeguard is limited to a one-time use, however, and lawmakers acknowledge it will not resolve cases where a household has entered a tenancy that is structurally unaffordable.
The draft drew predictable responses from stakeholders: the German Tenants’ Association called the measures long overdue and hailed them as an important advance for tenant protection, while the landlords’ organisation Haus & Grund warned the rules could make private rental investment less attractive. Lawmakers in the Bundestag now face the task of reconciling those viewpoints as they examine amendments and implementation details.
If passed, the package would alter key mechanics of Germany’s rental market enforcement — from how landlords document furniture charges to when short-term contracts are permissible and how inflation-linked rents are calculated in tight markets. Proponents say the changes will improve clarity and give tenants more tools to challenge excessive charges, while critics say the measures risk shifting costs or discouraging supply. The final shape of the law will depend on parliamentary debate and any negotiated compromises before it reaches the Bundesrat and enters into force.
