Rent Index Capped at 3.5%, Tenant Protections Strengthened

The draft law proposes multiple amendments to residential tenancy law. Index rents would be capped at 3.5% annual increases, replacing any prior escalation formula. Furniture supplements would face new transparency disclosure requirements. Short-term rental contracts would be subject to a maximum duration limit to prevent circumvention of existing rent brake protections. Additionally, rent arrears repayments could be used to cure ordinary terminations once, providing tenants with a new path to preserve their tenancy after default.

Landlords, property managers, and housing companies operating in Germany should monitor this draft legislation closely. If enacted, the rent index cap would directly limit revenue growth on index-linked tenancies. Short-term rental operators may need to restructure contract terms to comply with the new maximum duration rules. Property owners should review existing tenancy agreements for furniture supplement disclosures to ensure compliance with forthcoming transparency requirements.