In Germany, it is differentiated between “Kaltmiete”, which means rent without any additional costs, and “Warmmiete”, which is the rent including additional costs. The rental price varies according to the kind of accommodation, its condition and its size. Moreover, location has a strong influence on the price of a property, so that those located in larger cities are often also more expensive. An additional factor is a general increase in the demand for properties in certain areas.
Therefore, landlords have the possibility to adjust the rent to the general local development of rental prices also in a current renting agreement. However, rental increases are regulated and limited by German law.
The so called “Mietpreisbremse” applies in areas with a highly competitive rental market. According to this regulation, the price of newly rented out properties in these areas may not exceed the local comparable rent by more than 10%. An additional regulation, called “Kappungsgrenze”, states that increases in rent may not exceed 20% of the original rental price within 3 years. Both regulations are part of the BGB.
To be sure that you are not paying too much for a property, you can check the local rent index, or “Mietspiegel” online. The landlord may not use it as a reason for terminating the rental contract, should the tenant not agree to the increase in rent.