Rental Law Reform 2026: What Lies Ahead for Tenants and Landlords

The planned 'Tenancy Law II' reform is intended to tighten the rent cap and strengthen tenants against termination. It is not yet in force — I review your contracts and ongoing proceedings under the law as it currently stands.

With the “Act Amending the Law on Residential and Commercial Tenancies” — “Tenancy Law II” for short — the Federal Government is planning the most significant change to tenancy law in years. An important point first: the reform is not yet in force. The bill (Bundestag printed paper 21/6807 of 1 July 2026) has now reached the committee stage, and further amendments during the legislative process are likely. For all ongoing tenancy matters, the current law therefore still applies — not what is proposed to come. This article sets out where the debate stands and is no substitute for a review of your individual case.

How I Can Help You

• Reviewing your existing contracts (furnished, fixed-term, index-linked) for future points of challenge
• Assessing ongoing eviction and payment matters under the law as it currently stands
• Adapting your tenancy agreements and templates once the final version is settled
• Enforcing or defending against rent increases and terminations

What It’s About — Five Planned Changes

The bill aims to make the rent cap more effective and to close typical routes around it. Five points are particularly important in practice; the provisions cited are draft versions (referred to below as “BGB-E”).

1. Short-term lettings to be restricted (§ 549 BGB-E). The exemption from tenant protection for residential accommodation “for temporary use” is to be limited, as a rule, to no more than six months — extendable to up to eight months where a longer need can be demonstrated. After that, all protective provisions apply, in particular the rent cap. The aim is to prevent chains of fixed-term agreements being used to circumvent the rent cap.

2. Furniture surcharge to be capped (§§ 556d, 556g BGB-E). The surcharge for furnishings is to be limited to no more than one per cent of the current value of the furniture per month. Crucially, the landlord is to be required to state the furniture surcharge separately before the contract is concluded — otherwise the property is treated as unfurnished and no surcharge applies.

3. Cap on index-linked rents in tight markets (§ 557b BGB-E). In areas with a strained housing market, the annual increase is to be curbed: if the relevant price index rises by more than three per cent within a year, half of the portion above that threshold is to be disregarded.

4. Payment within the grace period to also cure ordinary termination in future (§ 573(4) BGB-E). This is the change with the greatest practical consequences. Under current law, paying the arrears in full only renders the termination without notice ineffective (§ 569(3) no. 2 BGB); it does not affect the ordinary termination declared in the alternative. In future, payment within the deadline is, on a one-off basis, also to remove the ordinary termination.

5. Relief for landlords on modernisation (§ 559c BGB-E). The value threshold for the simplified modernisation procedure is to be raised from €10,000 to €20,000 per dwelling — less documentation for smaller works.

What This Means for Tenants

• Furnished or fixed-term property? Have it checked whether the fixed term and the furniture surcharge are properly justified. Rent that is set too high can already be challenged today — but you must invoke the rent cap by way of a formal objection.
• In arrears or facing an eviction claim? If the reform becomes law, your position improves, because paying within the deadline will then also be able to remove the ordinary termination. Until then, the existing law applies — here every day counts, so don’t wait for the legislation.
• Index-linked rent: Don’t simply accept increase notices after sharp jumps in the index without having them checked.

What This Means for Landlords

• Short-term and furnished-letting models should be prepared early for the planned six-to-eight-month limit and the disclosure requirement.
• Modernisation: Smaller works up to €20,000 are likely to become easier to pass on — which makes forward planning worthwhile.
• Termination strategy: Where a tenant is in arrears, ordinary termination loses value as a safety net behind termination without notice. Send reminders for arrears early and in a way you can prove.

Häufige Fragen

Is the new rent cap already in force?

No. This is a bill that has not yet been passed. For ongoing contracts and proceedings, the current law continues to apply.

I’ve got an eviction claim hanging over me and want to pay the arrears — does the reform help me?

Under the bill, paying within the deadline would in future also cure the ordinary termination. As long as the reform is not in force, however, the existing law still applies. Act at once, therefore, and don’t wait for the legislation.

My landlord is charging a furniture surcharge — is that permissible?

A surcharge can be permissible, but it must be capable of being justified. In future, the bill will require it to be stated separately before the contract is concluded. Whether your particular surcharge can be challenged is something I will review on the basis of your contract.

Your Next Step

Whether you are a tenant or a landlord, the sensible thing now is to review existing contracts and to assess ongoing proceedings under the law as it currently stands, rather than waiting for the legislation. As soon as the final version is available, I will adapt your contracts and templates to the new wording. You’ll find more on tenancy and property matters on the Real Estate Law page — or bring me your contract and we’ll go through it together.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-07-25.

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