Real Estate Law2026-10-29

Stagnating Rents in Munich: What Does It Mean for a Rent Increase or a Challenge Under the Rent Cap?

When rent growth in Munich stalls, the calculation basis for rent increases and the rent cap shifts in tenants' favour. Here is what that means in practice for your increase notice or your challenge.

You have received a rent increase notice from your landlord. Now you are asking yourself whether the rent being demanded really reflects the current state of the market. Or perhaps you took on a flat not so long ago, and you are now annoyed that the rent looks high compared with similar flats nearby. Both situations share the same legal core: the local comparative rent. When rent growth in Munich slows, or individual areas stagnate, it is precisely this figure that changes. And with it, your position vis-à-vis your landlord changes too.

In brief

A slowdown in rent growth affects two separate legal questions. If you are resisting a rent increase demand under section 558 BGB, it can be examined whether the comparative rent asserted by your landlord is still supported. What matters here is the current rent index (Mietspiegel), which must be updated every two years. If you have only recently rented a flat in Munich, the same stagnation can widen the gap: the agreed rent then exceeds the rent cap’s limit of 10 per cent above the comparative rent by more than was apparent when the contract was signed. The consequence is that a challenge under section 556g BGB may bring money back. In both cases, it is the comparative rent in your specific case that decides the matter — not the general market trend.

How I can help you

Reviewing a rent increase notice for its form, deadlines and the comparative rent it relies on
Assessing whether your flat falls under the capping limit, and whether Munich counts as an area with a tight housing market for your particular location
Reviewing a tenancy agreement against the rent cap, including the exceptions for the previous rent, modernisation and new-build
Drafting and sending a challenge under section 556g BGB in the required text form
Enforcing restitution claims and representing you if the landlord sues in court for consent to the increase

Rent increase under section 558 BGB: the conditions the landlord must satisfy one by one

A demand to raise the rent to the local comparative rent is only valid if several conditions are met at the same time. If even one of them is missing, the demand is ineffective — not merely “too high”:

Waiting period since the last change: At the point of the increase, the rent must have remained unchanged for at least 15 months.
Lock-out period between two demands: A new increase demand is only permissible at the earliest one year after the last rent increase. What counts is the point at which the previous increase took effect. Increases on account of modernisation or higher operating costs do not count for this purpose.
Form and justification: The demand must be made in text form and must be justified. It is customary to rely on a rent index, on at least three comparable flats, or on an expert’s report. If there is no comprehensible justification, the notice is formally invalid.
Capping limit: Within three years, the rent may rise by no more than 20 per cent through increases under section 558 BGB. The state government designates areas with a tight housing market by statutory instrument. In those areas, this limit falls to 15 per cent. Munich is among the Bavarian areas for which this stricter limit generally applies.
The tenant’s period for consent: You only have to consent by the end of the month after next following receipt of the demand. If you do not consent, the landlord may sue for consent within a further three months. If he does not act, the demand lapses.

Why a stagnating market changes the comparative rent itself

Many Munich increase demands rely on the qualified rent index. Under section 558d BGB, the landlord must adjust this to market developments every two years and draw it up entirely afresh every four years. This is exactly where stagnation comes into play. If rent growth across the city as a whole, or in individual areas, turns out weaker, or comes to a standstill, that must be reflected in the next update. The comparative rent shown then rises more slowly, or not at all.

For you as a tenant, this means two things:

The landlord must use the current version. If an increase demand relies on an outdated version of the rent index, the justification is open to challenge. The same applies to comparable flats whose own rents already lie above the current market level.
A qualified rent index is presumed to be correct — but this presumption can be rebutted. If it was not updated within the deadline, an increase relying on it loses its basis. The same applies where the actual market data diverge considerably. A simple rent index does not enjoy this presumption in any event. In that case, in a dispute, the landlord must additionally prove the local comparative rent.

In practice, with every increase notice it is worth working out the specific rent index entry for the flat’s size, age and location against the increase actually being demanded. Do not rely on the blanket assertion that the figure is “in line with local rents”.

The rent cap on a new letting: where stagnation makes the deviation larger

If you have newly rented your flat, a different calculation logic applies. Under sections 556d et seq. BGB, in areas with a tight housing market the agreed rent may exceed the local comparative rent at the start of the tenancy by no more than 10 per cent. Munich counts among these areas under the relevant Bavarian statutory instrument. This rule applies in principle until the end of 2029. After that, an extension or new regulation will decide whether it continues to apply.

The law allows three exceptions, and they are often the real point of dispute:

Previous rent (section 556e BGB): If the previous tenant was already paying more than the rent permitted under the cap, this higher amount may be demanded again. Rent increases from the final year before the end of the previous tenancy do not, however, count towards this.
Modernisation (section 556e BGB): If the flat was modernised within the last three years before the start of the tenancy, the permissible rent may rise. The amount then corresponds to a standard modernisation surcharge.
New-build and comprehensive modernisation (section 556f BGB): Flats first used and let after 1 October 2014 are entirely exempt from the cap. The same applies to the first letting following a comprehensive modernisation.

The link to stagnation is this: the more slowly the comparative rent in Munich rises, the larger the gap generally becomes between a rent agreed some years ago at a high calculation and the 10 per cent limit in force today. That applies, however, only where none of the three exceptions bites. So it is worth looking again if, when you moved in, you were still assuming rents would keep rising, and the agreed rent seemed “still within reason” at the time.

The challenge under section 556g BGB: form, deadlines and what it gains you

An excessive rent is not refunded automatically — you must expressly challenge the breach of the rent cap in order to reclaim amounts overpaid:

Form: The challenge must be made in text form (an email or letter will do; orally will not). If the landlord relies on information provided under section 556g(1a) BGB (for example on the previous rent or modernisation), the challenge must refer specifically to that information.
Period for restitution: If the challenge is made within 30 months of the start of the tenancy, you can reclaim the overpaid rent from the beginning of the contract. If you challenge later, or if the tenancy has already ended when the challenge is received, a narrower limit applies. You can then only reclaim the rent that fell due after receipt of the challenge.
Right to information: You can require the landlord to tell you the facts relevant to the calculation. This applies provided those facts are not generally accessible and he can state them without difficulty.
Repayment: The difference between the agreed and the permissible rent must be repaid under the law of unjust enrichment. The restrictions that would otherwise apply under sections 814 and 817 sentence 2 BGB expressly do not apply here.

A typical example

A tenant moves into an existing Munich flat that has been let for several years. The rent seemed “in line with the market” when they moved in — because rents in the area were still rising sharply at the time. Two years later, the updated rent index shows that the comparative rent for that location, size and year of construction has barely risen since. A recalculation reveals that the agreed rent exceeds the permissible limit of 10 per cent above the current comparative rent. None of the exceptions for previous rent, modernisation or new-build applies here. The tenant challenges the breach in text form while still within the 30-month period and reclaims the difference going back to the start of the contract.

Common mistakes

Accepting the blanket reference to “rising rents in Munich” without checking it. It would be better to recalculate the specific rent index entry for one’s own flat size, location and age.
Letting the period for consenting to the rent increase lapse. Withholding consent, where the justification is missing or the deadlines have not been kept, would often have been the better option.
Raising the rent-cap challenge only after the 30-month period has expired. This means a large part of the restitution claim is lost.
Overlooking the rent-cap exceptions (previous rent, modernisation, new-build). These often justify the agreed rent in full. A challenge made without first checking these points then comes to nothing.
Treating an informal, oral complaint as sufficient. Section 556g BGB expressly requires text form.

Frequently asked questions

Do I have to object to a rent increase, or is staying silent enough?

Silence is no protection. If you do not expressly consent, the landlord can sue in court for consent within three months of the end of your period for consideration. Instead, you should actively examine the demand. If the conditions are not met, refuse consent and give your reasons.

Does the 15 per cent or the 20 per cent capping limit apply to my flat in Munich?

That depends on whether your municipality, or your location, is covered by the currently applicable Bavarian statutory instrument as an area with a tight supply of housing. For Munich this is generally the case, so the lower 15 per cent limit usually applies. What is decisive is the precise scope of the instrument, which I examine in the individual case.

What happens if my landlord never gave me the information required under section 556g(1a) BGB?

If the landlord did not provide the mandatory information on the previous rent or modernisation in good time and in the proper form, he cannot initially rely on the corresponding exception to the rent cap. Only once he provides the information properly, after the fact, may he rely on it — and then at the earliest two years later.

Is a challenge worthwhile if my tenancy has already ended?

Yes, but with a qualification. If the tenancy has already ended when the challenge is received, or the start of the tenancy was more than 30 months ago, a narrower limit applies. You can then only reclaim the rent that would have fallen due after receipt of the challenge — not the entire period since the start of the contract.

Is a simple, unqualified rent index enough as evidence for a rent increase?

A simple rent index does not carry the statutory presumption of correctness that attaches to a qualified rent index under section 558d BGB. In a dispute, the landlord must then additionally prove the local comparative rent by other means — for example, comparable flats or an expert’s report.

Your next step

Whether an increase demand, or a rent agreed at too high a level, is in fact open to challenge is decided by the specific comparative rent for your flat — not by the general state of the market. Send me your increase notice or your tenancy agreement. I will check the deadlines, the form and the calculation basis. I will then tell you whether an objection or a challenge is worth pursuing. You can also find out more about your options in tenancy law in the Property Law section. The initial consultation takes place nationwide, by video or telephone.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-10-29.

Christian Czirnich, Rechtsanwalt (attorney at law), Kirchseeon near Munich

Tell me what your rent increase letter says – I will take a look.

I read every message myself and usually reply on the next working day. What you write to me is covered by legal professional privilege from the first word, even if no engagement comes about. The initial assessment is free of charge.