Rent increase after modernisation: what you can pass on
How much of the modernisation costs you can add to the rent, and which deadlines you have to keep.
After a modernisation, you can add 8% of the costs for the flat to the annual rent, capped at €3/m² within six years. Announce the works at least three months ahead, and tell the tenant about the increase in text form afterwards.
How to pass on modernisation costs
The rules for passing on the costs are clear. If you work through them in order, you avoid cuts and delays.
- 1
Only real modernisation counts
You can only pass on work that saves energy or water, or that makes the flat better for good.
- 2
Announce the works
Tell the tenant about the works at least three months ahead.
- 3
Pass on 8% a year
You can add 8% of the costs that fall on the flat to the annual rent.
- 4
Deduct maintenance first
First deduct what you would have had to spend on maintenance anyway.
- 5
Keep to the cap
The monthly rent can rise by at most €3/m² within six years, or by at most €2/m² if the rent is under €7/m² (§ 559 Abs. 3a BGB).
- 6
Declare the increase
After the works, tell the tenant about the increase in text form.
Why this matters
Under § 559 Abs. 1 BGB, you can raise the annual rent by 8% of the costs spent on the flat. Costs that you would have needed for maintenance anyway do not count.
General information, not legal advice.
Frequently asked questions
What percentage of modernisation costs can I pass on to the rent?
You can pass on 8% a year of the modernisation costs that fall on the flat (§ 559 Abs. 1 BGB). If the works cover several flats, only this flat's share counts. First deduct what you would have had to spend on maintenance anyway.
Do I have to announce the modernisation in advance?
Yes, you have to announce the modernisation at least three months ahead (§ 555c BGB). After the works, you tell the tenant about the increase in text form (§ 559b BGB).
When does the tenant have to start paying the higher rent?
The tenant owes the higher rent from the start of the third month after your declaration arrives (§ 559b Abs. 2 BGB). If your announcement had mistakes, or the actual rent increase is more than 10% above the one you announced, the date moves back by six months.
Also in this topic: Passing the Grundsteuer on to tenants: 2026 guideHeizkostenabrechnung: a landlord's guide for GermanyNebenkostenabrechnung: a landlord's guide for GermanyMietschuldenfreiheitsbescheinigung: must landlords issue it?
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