Private landlords are facing increasing financial pressure as energy and living costs rise, and the draft tenancy-law reform further restricts their room for manoeuvre. The Bundestag debated it at its first reading on 9 July 2026, and committee deliberations will now follow. The reform is expected to come into force in autumn 2026, after the parliamentary summer recess.
Wohnen im Eigentum fears additional costs and falling returns for owners. “Private landlords provide the largest share of Germany’s rental housing supply, at 64.4 per cent of the rental stock. At the same time, a rented property is a central element of private retirement provision for many people. Despite the amendments, the proposed restrictions will make letting property increasingly less worthwhile for this group. We fear that private providers will withdraw, with noticeable consequences for the already scarce housing supply,” says Dr Sandra von Möller, Executive Board member of the nationwide consumer protection association Wohnen im Eigentum (WiE). “There needs to be a fair balance between protecting tenants from abusive practices and ensuring economic viability for small private landlords,” von Möller adds.
Furnishings: flat-rate amount increased to 10 per cent of net rent excluding service charges
The draft law provides for the furniture surcharge to be shown separately, either as a flat-rate amount or as an estimate based on the furniture’s current value.
Following the amendments, the proposed flat-rate percentage that will serve as the standard presumption for an appropriate surcharge on fully furnished accommodation has been increased to 10 per cent.
Alternatively, an amount can be set on the basis of the furniture’s current value. One per cent of that value per month is considered appropriate. According to the explanatory memorandum, this percentage is intended to allow the investment to be recouped within a reasonable period.
Short-term lets: limit restricts freedom of contract
The draft law introduces a legal definition of “temporary use” of residential accommodation and generally limits it to a maximum of six months. The amendments introduced an option to extend a short-term tenancy once by a further two months, for example if an internship is extended or an examination postponed. The reason is that Germany’s rent cap does not apply to short-term lets.
Wohnen im Eigentum criticises the rigid time limit. “The option of extending the term to eight months does not change our critical assessment,” says von Möller. “The fixed limit does not adequately reflect the need for flexible accommodation.”
Index-linked rent: additional costs shared by tenants and landlords
For index-linked rents (Section 557b of the German Civil Code), the permitted rent increase is to be limited in areas with a tight housing market: if the index-linked rent rises by more than 3 per cent, only half of the portion above that figure may be added to the rent.
“This places an additional burden on private landlords, who are themselves affected by inflation and often use rental income for retirement provision,” criticises WiE Executive Board member Dr Sandra von Möller. This contradicts the purpose of an index-linked rent.
Moreover, the consumer price index already provides an inadequate reflection of actual cost increases in the property sector, as tradespeople’s services and building materials have been subject to even higher price increases for years.
Termination for payment arrears: landlords bear the full cost risk
WiE is particularly critical that the planned extension of the so-called grace-period rule is being retained. In future, payment of rent arrears within the statutory period is intended to invalidate not only termination without notice, but also ordinary termination for payment arrears.
In the association’s view, this shifts the cost risk substantially to landlords. Eviction proceedings also regularly incur high court and legal costs. Although landlords can demand reimbursement of legal costs from tenants, the latter are unlikely to be able to pay them if they were already having difficulty paying the rent regularly.
Tenants’ association welcomes proposed changes
The German Tenants’ Association (DMB) welcomes today’s first reading of the tenancy-law reform in the German Bundestag. The “Act Amending the Law on Residential and Commercial Tenancies” addresses pressing problems faced by tenants. The reform must now be adopted swiftly and strengthened at key points during the parliamentary process.
“Tenancy-law reform is long overdue. The proposed rules on index-linked rents, short-term lets, furnished accommodation and grace-period payments are right and necessary to improve tenant protection and prevent strategies that circumvent tenancy law,” explains DMB President Melanie Weber-Moritz. “The law will protect tenants more effectively against excessive rents and the loss of their homes. Nevertheless, the draft still needs improvement in several areas.”