Rent increase after modernisation: pass on 8 % (2026)
Rent increase after modernisation: pass on 8 %
8% of the costs attributable to the flat per year, capped at €3/m² over six years (§ 559 BGB).
Where the monthly rent is under €7/m², the cap is €2/m². You must announce the work at least three months in advance (§ 555c BGB) and then declare the increase in text form (§ 559b BGB).
§ 559 Abs. 1 BGBIn 60 seconds
Only genuine modernisation qualifies. Energy improvements, lasting savings in energy or water, or a durable increase in amenity value. Plain maintenance does not.
Saved maintenance costs must be deducted (§ 559 Abs. 2 BGB): where the work replaces a repair that was due, that repair share comes out.
The pass-on is capped at €3/m² over six years, and at €2/m² where the starting rent is under €7/m² (§ 559 Abs. 3a BGB). Where the 8% formula gives more, it is cut back.
The modernisation notice must reach the tenant in text form at least three months before work starts, stating the kind and scope, the start and duration, the expected rent increase and the future operating costs (§ 555c BGB).
The tenant owes the higher rent from the start of the third month after the declaration arrives; where notice was absent or defective, or announced costs were exceeded by more than 10%, that period extends by a further three months (§ 559b Abs. 2 BGB).
What the law says
Where the landlord has carried out modernisation measures, they may increase the annual rent by 8 per cent of the costs spent on the flat. Costs that would have been necessary for maintenance do not count as costs spent and must be established, if need be by estimate. Working translation; the German original is the binding text.
A worked example
A flat modernised at a cost of €12,000, of which €2,000 was maintenance saved.
Then test it against the cap: at 60 m² with a starting rent over €7/m² the ceiling is €180 of increase over six years. Where the formula gives more, it is cut back.
Which costs you may pass on, and which you may not
| Chargeable (§ 559 BGB) | Not chargeable |
|---|---|
| Energy retrofit (insulation, new heating) | Repairing a broken boiler (maintenance) |
| Installing a heat pump | Routine servicing |
| Better-insulating windows (less the repair share) | Swapping windows with no improvement |
| Adding a balcony (improved amenity) | Redecoration |
| First installation of modern sanitary fittings | Remedying defects |
Related: Increasing rent under § 558 BGB and The rent brake on reletting.
What it means for each side
- Check that the maintenance share was deducted.
- Work out the cap: €3/m² over six years, €2/m² where the starting rent is low.
- Without a transparent cost breakdown the declaration is formally void.
- The higher rent only starts from the third month after receipt.
- Separate modernisation from maintenance cleanly and document every item.
- Give notice at least three months in advance, in text form.
- Set out the calculation transparently in the declaration.
- Check the cap before applying the 8% formula.
Common mistakes
The commonest reason increases fail.
The 8% formula alone is not enough, the ceiling takes precedence.
The three-month period and text form are mandatory; otherwise payment starts later.
Without a cost breakdown it is formally void, and the tenant need not pay.
What to do next
Establish the modernisation costs and deduct the maintenance saved (§ 559 Abs. 2 BGB).
Apportion the share attributable to the flat, as a rule by floor area.
Apply 8% a year, divide by twelve, and test against the cap.
Give notice at least three months ahead and then declare the increase transparently in text form.
Frequently asked questions
What percentage of modernisation costs can I pass on to the rent?
8 % of the modernisation costs attributable to the dwelling per year (§ 559 para. 1 BGB). With several units, only the share attributable to the individual flat counts. Saved maintenance costs must be deducted first.
How high is the Kappungsgrenze for the Modernisierungsumlage?
The rent may rise by at most 3 €/m² over six years through the pass-through (§ 559 para. 3a BGB). If the monthly rent before the increase was below 7 €/m², a limit of 2 €/m² applies.
Do I have to announce a Modernisierung in advance?
Yes. You must announce the measure to the tenant in Textform at least three months before it begins (§ 555c BGB). The announcement must state the type, scope, expected start and duration, and the rent increase to be expected.
From when does the tenant owe the higher rent?
The increased rent is owed from the start of the third month after the Erhöhungserklärung is received (§ 559b para. 2 BGB). If the announcement was faulty or the announced costs were exceeded by more than 10 %, this period extends by a further three months.
Can I pass on maintenance costs as well?
No. Pure Instandhaltung (maintenance) and repairs are not passable. Where a measure also replaces a repair (e.g. new windows instead of a repair), the saved maintenance costs must be deducted (§ 559 para. 2 BGB).
This page gives general information as at the date shown. It does not replace legal advice on an individual case.