Germany’s federal government bill to rewrite its residential lease law went through a public expert hearing in the Bundestag’s legal affairs committee on 14 October 2026, and the parts that touch money are all about rent: index-linked increases would be capped in tight housing markets, the surcharge on furnished flats would get a ceiling, and the exemption that has let short-term lets sit outside the rent brake would be narrowed. It is not law: the committee is still taking evidence, and no date has been set for the second reading.
That timing is no accident. On 15 October the German Tenants’ Association and the DGB union federation held a housing summit in Berlin and published a Forsa poll they commissioned in which 89% of tenants in large cities said they wanted tougher penalties for landlords who charge excessive rents. Tenant groups want the bill sharpened, and the landlords’ associations want it dropped. Here is what the draft actually says, and what an agent can tell a client while it is still a draft.
What Germany’s Rent Reform Bill Would Change
The bill is the Entwurf eines Gesetzes zur Änderung des Rechts der Wohn- und Geschäftsraummiete, called Mietrecht II in the ministry’s own paperwork. Adopted by the cabinet on 29 April 2026, it got a first reading on 9 July 2026 and went to the legal affairs committee for evidence on Drucksache 21/6807 on 14 October 2026. Germany’s Federal Ministry of Justice publishes the draft, the opinions and its own explainer.
Four changes carry the weight for anyone who owns or buys a rented flat.
- Index-linked rents. In a tight housing market an annual increase tied to the consumer price index would be capped, and where prices rise more than 3% in a year, half of the excess would be disregarded.
- Furnished flats. A surcharge for furniture would have to be disclosed separately and without being asked, and it would be capped. A flat rate of 10% of the net cold rent is written into the draft for fully furnished homes.
- Short lets. Short-term letting would keep its exemption from tenant protection only for leases of up to six months, extendable once to eight.
- Rent arrears. A tenant who clears the debt in full could cancel an ordinary notice once, an extension of a protection that today covers only the extraordinary notice.
How the Index-Rent Cap Would Work in Practice
The mechanism is the Indexmiete. Instead of following a local rent table, the annual increase is tied to the national consumer price index, which is why it has spread through German cities: it moves by itself. Under the draft, in a tight housing market the increase is capped so that when the index rises by more than 3% in a year, half of everything above that line is disregarded. Worked through, an index rise of 5% would support an increase of 4%: the first three points pass through, and half of the two above them is dropped.
New and existing index leases would both be covered, and the draft makes the rule symmetric, so a falling index is shared the same way rather than ignored when it helps the landlord. For a valuation, that changes the rent line an agent should model: 3% a year plus half of any excess, not the headline inflation figure a lease quotes. It applies only where the market counts as tight, which is the same test the rent brake already uses.
Short Lets and Furnished Flats Face New Limits
The short-let rule closes a gap that has been argued over for years. Letting a home for temporary use has sat outside the rent brake, and the law never said clearly when a let counts as temporary. Six months is the line, with a single extension to eight where a longer need appears after the tenancy starts. Cross it and every tenant protection applies, rent brake included, which is the part that matters to an owner letting a city flat by the week.
Furnishing is the second target. In a tight market a landlord would have to say, separately and unprompted, what surcharge the furniture carries, and the surcharge would have to follow the current value of the furniture and stay reasonable. For a fully furnished flat the draft allows a simplified flat rate of 10% of the net cold rent. If the landlord does not disclose it at all, the law would treat the flat as unfurnished for the purpose of the permitted rent, which is the sharpest edge in the bill.
Experts disagreed on all of it. beck-aktuell reported that the Innsbruck rent-law professor Martin Häublein called it very unlikely that the new rules would bring short-let housing back onto the regular rental market, that Haus und Grund president Kai H. Warnecke rejected the draft outright, and that the tenant side wanted it tightened rather than softened.
Where the Bill Stands and What Comes Next
A German bill passes through a fixed sequence, and Mietrecht II is about two thirds of the way along it. Evidence closed with the committee hearing on 14 October 2026, the last stage before the committee writes its report and the Bundestag votes.
| Stage | Date | State |
|---|---|---|
| Cabinet adopts the draft | 29 April 2026 | Done |
| Bundesrat opinion | June 2026 | Done |
| First reading in the Bundestag | 9 July 2026 | Done |
| Public expert hearing | 14 October 2026 | Done |
| Committee report and second reading | Not scheduled | Pending |
| Bundesrat second pass and signature | After the vote | Pending |
The political fight is not over. Landlords’ associations, among them Haus und Grund and the IVD, argue that the draft reaches into settled structures and hurts small private landlords, while the tenants’ association and the unions say it should go further. In its opinion the Bundesrat asked for incentives to let vacant housing quickly and for less bureaucracy, and the government answered that measures are already running and more rules are unnecessary. Until the committee reports, there is no date for the second reading.
What Agents Should Check Before Advising a Client
None of this changes a signed lease today, because the bill is not law. What it does change is the list of questions worth asking before a client commits, and they are cheap to run.
- Establish whether the flat sits in a tight housing market, because the index-rent cap and the disclosure duty on furniture apply only there.
- Read the lease and note whether it is an index lease or a stepped rent, then check how the last increase was calculated.
- For a furnished flat, ask for the furniture surcharge in writing. If the landlord will not itemise it, the draft would treat the flat as unfurnished.
- For a flat used for short lets, count the months. Stays beyond six months, or eight with the extension, would fall under the rent brake.
- Model rent growth at 3% plus half of any excess rather than at the index headline, and say which assumption the yield rests on.
Agents in the wider property market watch the same file. A cap on index rents in one large market is read as a signal by landlords elsewhere who use the same lease structure, and a disclosure duty on the furnishing surcharge is the kind of rule that gets copied.
Why the Rent Cap Matters to Buyers as Well
For someone buying a rented German flat, the rent is the yield, and two of these changes go straight at it. A cap on index-linked increases trims the growth an owner can book, and a furnishing surcharge that has to be disclosed and capped removes one of the ways a high rent is dressed up. House prices in Germany already sit in a market where tenants carry more protection than in most of Europe, and this bill would move that line a little further.
Honest advice for now is procedural. Nothing in the draft binds anyone until it is passed, and the committee stage is exactly where German rent bills have been softened or slowed before. An agent who knows which leases are index-linked, and which flats are let short-term, will see the effect first.
Questions Agents Ask About Germany’s Rent Reform
These come up as soon as a client owns a German flat or is thinking about one.
Is the German rent reform law yet?
No. Mietrecht II is a government draft that has had its first reading and its committee hearing, on 14 October 2026, but the Bundestag has not voted and the second reading has no date. Nothing in it binds a lease today.
Which landlords does the index-rent cap affect?
Only those letting in an area classified as a tight housing market, and only leases whose increase is tied to the consumer price index. Where the index rises more than 3% in a year, half of the excess is disregarded.
How much can a furnished flat charge for furniture?
A simplified flat rate of 10% of the net cold rent is allowed for a fully furnished home, and the surcharge has to be disclosed separately and without being asked. A landlord who does not disclose it would have the flat treated as unfurnished for the permitted rent.
Do short-term lets still escape the rent brake?
Only up to six months, with one extension to eight where a longer need appears after the tenancy starts. Beyond that, all tenant protections apply, including the rent brake.
What changes for a tenant behind on rent?
An existing protection would be extended to ordinary notices: a tenant who pays the arrears in full could cancel such a notice once. A second change raises the value threshold for the simplified modernisation increase, from €10,000 to €20,000.
