Rent increase and the cap: how much may the rent rise?
Reading time 9 min · Updated 05.07.2026
Key facts at a glance
- Cap § 558 (3) BGB: max. +20 % in 3 years, +15 % in tight markets.
- One-year lock § 558 (1): 12 months must have passed since the last increase.
- Effect § 558b (1): the higher rent applies from the 3rd calendar month after receipt.
- The ceiling remains the local reference rent (rent index, expert report, comparable flats).
- Alternatives: modernisation § 559 (8 %), stepped rent § 557a, index rent § 557b.
The three hurdles of a reference-rent increase (§ 558)
- One-year lock (§ 558 (1)): rent unchanged for 12 months (modernisation and operating-cost rises aside).
- Cap (§ 558 (3)): at most +20 % (or +15 %) versus the rent three years earlier.
- Reference rent (§ 558 (2)): justified by a rent index, expert report or three comparable flats — the absolute ceiling.
20 % or 15 %? The cap in detail
| Base rent (3 years ago) | Cap 20 % | Cap 15 % |
|---|---|---|
| €600.00 | max. €720.00 | max. €690.00 |
| €850.00 | max. €1,020.00 | max. €977.50 |
| €1,200.00 | max. €1,440.00 | max. €1,380.00 |
Other routes
Modernisation (§ 559)
Up to 8 % of costs may be added to the annual rent, capped at €3/m² in six years (or €2/m² below €7/m²), independent of the § 558 cap.
Stepped (§ 557a) and index rent (§ 557b)
Stepped rents fix the amounts in the contract (each step ≥ 1 year); index rents follow the consumer price index (new = old × CPI new / CPI old). During either, § 558/§ 559 increases are generally barred.
How Torch Real Estate solves this
Torch Real Estate’s rent-increase assistant checks the lock, the cap (20/15 %), the earliest effective date under § 558b and the § 559 cap automatically from the contract and increase history — and generates the finished demand letter as a PDF.
Frequently asked questions
What is the cap on a rent increase?+
The cap under § 558 (3) BGB limits increases to the local reference rent: net cold rent may rise by at most 20 % within three years. In designated tight-market areas the limit is 15 %.
How often may I raise the rent?+
An increase to the reference rent is only allowed once the rent has been unchanged for 12 months (§ 558 (1)). Modernisation increases (§ 559) do not count towards the cap.
From when must the tenant pay the higher rent?+
From the start of the third calendar month after receipt of the demand (§ 558b (1)). A July demand makes the higher rent due from 1 October — provided the tenant consents or is sued for consent.
Does the cap apply to modernisation?+
No. Modernisation increases under § 559 (up to 8 % of costs annually) have their own cap of €3/m² or €2/m² over six years, not the 20/15 % limit of § 558.
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This article reflects the general legal position at the stated date and is not legal advice. State law, individual circumstances and current case law may differ — when in doubt, consult a tenants' association, lawyer or tax advisor.