Germany is preparing a major reform of its rental legislation, which will limit some of the options for landlords in setting rents and drafting contracts. The federal government's bill has already passed its first reading in the Bundestag and is due to be examined in detail by parliamentary committees.
The changes affect around 5.5 million private landlords in Germany, Handelsblatt reports. The main aim of the reform is to limit the circumvention of current rent restrictions and provide greater protection for tenants in markets with a housing shortage.
New rules for furnished apartments
One of the most significant changes is related to the additional amount that landlords can charge when renting out furnished apartments. According to the bill, this “furniture surcharge“ must be linked to the current value of the furnishings. The maximum monthly amount will in principle be 1% of the estimated residual value of the furnishings at the time of conclusion of the contract.
In the case of fully furnished dwellings, the draft law provides for a presumption that a supplement of up to 10% of the rent for the respective unfurnished dwelling is permissible. The landlord will have to inform the tenant in advance and on his own initiative of the amount of this supplement. If this is not done, the dwelling will generally be temporarily treated as unfurnished.
The aim is to limit the practice of offering minimally furnished apartments at significantly higher prices, thus effectively circumventing the rules on limiting rents.
Short-term contracts are limited to six months
Another key proposal concerns dwellings rented out for temporary use. The exception to some of the tenant protection rules will generally only be used for contracts with a term of up to six months. In certain cases, the term can be extended to a total of eight months if, after the start of the contract, an objective need for a longer temporary stay arises.
The German government argues for the change with the need to prevent the use of fictitious short-term contracts as a way of circumventing the so-called Mietpreisbremse - the mechanism that limits the initial rent in areas with a tight housing market.
Limit increases in index rents
The reform also affects index-linked rental contracts, where the price changes according to the German consumer price index.
In areas with an officially defined tight housing market, future increases must be limited in the event of high inflation. If the consumer price index increases by more than 3% in a year, only half of the increase above this threshold can be transferred to the rent.
This is an important clarification compared to earlier versions of the reform, which discussed a hard ceiling of 3.5%. In the current version submitted to the Bundestag, the mechanism is different - an increase above 3% is not completely prohibited, but only half is taken into account.
Greater protection in the event of unpaid rent
The bill also proposes a change in the termination of a contract due to unpaid rent.
Under the current rules, a tenant who fully repays his obligations within the specified statutory grace period can invalidate the extraordinary termination of the contract. In practice, however, the landlord can often terminate the contract in parallel and in accordance with the general procedure.
The reform provides that this protection will also apply to ordinary termination of the contract once. If the overdue amounts are paid in full, the tenant will be able to keep their home in this case as well.
Relief for owners is also provided
The package does not only contain restrictions for landlords. When modernizing a home, there is currently a simplified procedure for transferring part of the costs to the rent, when the investment does not exceed EUR 10,000 per home.
The government proposes to increase this threshold to EUR 20,000, as construction materials and services have become significantly more expensive.
The measure should primarily ease the burden on smaller owners when it comes to repairs such as replacing windows and other relatively limited modernizations.
Owners warn of the opposite effect
The reform is already drawing criticism from German owners' organizations. The president of Haus & Grund Kai Warnecke describes the proposals as a new restriction on private landlords and warns that additional regulation could weaken the functioning of the housing market.
The Bundesrat also has similar reservations. In its opinion, it insists that the final version of the law should maintain a balance between the interests of tenants and owners and not create additional obstacles to renting out empty homes and building new ones.
The law can still be changed
As of August 14, 2026, the proposed rules are not yet effective law. After the first reading on July 9, the bill was sent to the parliamentary committees, with the Committee on Legal Affairs and Consumer Protection taking the lead. This means that individual texts can be changed before the final vote.
If adopted in its current form, the reform will have a significant impact on the German rental housing market – especially on owners who use furnished homes, short-term contracts or index clauses.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be found at imot.bg