The rent cap in Berlin

What the rule requires

The rent cap (Mietpreisbremse) is set out in §§ 556d to 556g BGB (German Civil Code). It only applies where a federal state has declared that housing is scarce. Berlin has done this for the entire city.

The rule is simple. When a new tenant moves in, the rent may be at most ten per cent above what is usual for comparable flats in the area. This refers to the net cold rent. Service costs are not included.

This only applies when a flat is re-let. Existing tenancies are not affected. If you want to raise the rent in an existing tenancy, other rules apply. First, the cap on rent increases (Kappungsgrenze) under § 558 BGB (German Civil Code), i.e. the upper limit on how much the rent may rise within three years. Second, the modernisation levy under § 559 BGB, on which we have a separate article.

The federal government has extended the rent cap several times. Most recently, it allowed the federal states to keep it in force until the end of 2029. Berlin has done this. The Senate's rent restriction ordinance (Mietenbegrenzungsverordnung) again declares the entire city an area with a housing shortage from 1 January 2026 to 31 December 2029.

How the local comparative rent is determined

The local comparative rent is not a gut feeling. It means the rents recently agreed or changed in the city for similar flats. Similar means: same type, same size, same fittings, same condition, same location.

In Berlin, you consult the rent index (Mietspiegel) for this. It sorts flats into categories by year of construction, size and fittings and gives a range for each category. Where exactly your flat falls within this range is decided by features such as a second bathroom or a missing lift. This is exactly what gets fought over in court.

Before the tenant signs, record in writing how you classify the flat in the rent index. If the tenant complains later, this is your evidence. Without it, it is your word against theirs.

The four exceptions

1. The previous tenant already paid more. If their rent was already above the limit, you may continue to charge this amount. If the previous tenant paid less in the last year because the heating was broken or you waived part of the rent, that reduced amount does not count.
2. You have modernised in the last three years. Then you may increase the rent by as much as you could have for an existing tenant after a modernisation.
3. New build. Flats that were occupied and let for the first time after 1 October 2014 are not subject to the rent cap. This date applies throughout Germany.
4. You have completely renovated the flat. If an old flat comes close to a new build after the works, the exception also applies. The hurdle is high. New bathrooms and fresh paint are not enough for the courts; there must have been substantial construction work.

The duty to disclose that trips up many landlords

If you want to use one of the four exceptions, you must inform the tenant before they sign, on your own initiative and in black and white. If you forget, you cannot rely on the exception later. The higher rent then does not apply.

This is where most landlords fail in court. The exception applied. It just was not communicated in time, or only verbally. A remark during the viewing is not enough. It must be in writing, at least as an email.

And it must contain specifics. For the previous rent, state the amount. For the modernisation, set out what you did. A general statement is not enough.

What happens if too much was charged

The tenant can complain. The law calls this a Rüge (formal complaint). It requires no particular form, but should be made in writing so that it can be proven. From the day it reaches the landlord, the tenant only pays the permitted rent.

They get back the money they overpaid. If they complain within 30 months of moving in, they get back everything they overpaid since the start of the tenancy. If they complain later, only the amount from the day of the complaint (§ 556g para. 2 BGB, for tenancies since April 2020).

The tenancy agreement itself remains valid. Only the part of the rent that was too high is invalid. For you as a landlord, this means that the tenant stays, the rent falls and you pay something back.

What this means for investors

If you buy a let flat, you also buy the tenancy agreement. Raising the rent to market level is only possible within narrow limits. And when a new tenant moves in, the rent cap applies. Anyone who calculates their yield using the rents in adverts therefore regularly overestimates their return.

How far existing rents and advertised rents have now drifted apart is shown in the report on interest rates and market conditions. In short: the official index for all rents has risen much more slowly since 2020 than the rents in listings.

When valuing an apartment building (Zinshaus), the tenancy agreements therefore often matter more than the address. Two buildings on the same street can be far apart in value if one of them mainly has old tenancies.

Sources

• §§ 556d to 556g BGB (German Civil Code), rent cap, exceptions, duty to disclose and complaint
• Berlin rent restriction ordinance under § 556d para. 2 BGB (German Civil Code), valid from 1 January 2026 to 31 December 2029 (Senate press release of 11 November 2025)
• § 558 BGB (German Civil Code), rent increases up to the local comparative rent and cap on rent increases
• Berlin rent index as a qualified rent index within the meaning of § 558d BGB (German Civil Code)