Rent Law Reform 2026 & Heating Law: What Landlords in Germany Need to Know

What tenants, landlords and property managers in Germany should expect

The German housing market remains one of the most politically sensitive issues in the country. Rising rents, limited housing supply, high construction costs, energy-efficiency requirements and increasingly complex legal regulations have created growing tension between tenants, landlords, property owners and property managers.

Two major legislative topics are currently at the center of this debate: the planned Rent Law Reform 2026 and the revision of the current Building Energy Act, widely known in Germany as the “Heating Law”. Politically, the revised law is increasingly being referred to as the Building Modernization Act.

Both reforms pursue goals that sound reasonable at first: housing should remain affordable, and buildings should become more climate-friendly. In practice, however, many questions remain unanswered. Who will pay the additional costs? Who will deal with the increasing bureaucracy? And what will these reforms mean for private landlords, tenants and property management companies in everyday life?

In her video, Jaqueline Hartmann analyzes these developments from the perspective of an experienced property manager and real estate entrepreneur. She emphasizes that these reforms will not only affect large housing companies, but also private landlords, condominium owner associations and property managers.

1. Rent Law Reform 2026: Stronger tenant protection is planned

The German government is planning changes to residential tenancy law. The main objective is to strengthen tenant protection and limit possible ways of bypassing the rent brake.

The most important topics include:

furnished apartments
short-term rental agreements
index-linked rents
grace period payments in cases of rent arrears
modernization rent increases
greater transparency in tight housing markets

From the tenant’s perspective, these changes may offer more security and transparency. From the landlord’s perspective, however, they also mean more documentation, more legal uncertainty and potentially more disputes about rent levels.

It is important to note that not all details have been finalized yet. The reforms are still part of an ongoing legislative process. Nevertheless, the direction is clear: the government wants to intervene more strongly in rental models that have so far been used outside or at the margins of the rent brake.

2. Short-term rentals: Clear limits instead of grey areas

One key element of the reform concerns short-term rentals.

Until now, the distinction between genuine temporary rental use and de facto long-term housing has not always been clear. This is exactly where lawmakers want to introduce stricter rules.

In the future, short-term rental agreements are expected to be privileged only for a maximum period of six months. In exceptional cases, an extension to eight months may be possible. After that, the rental relationship would fall under regular residential tenancy law, including rent control and tenant protection.

This means that someone who genuinely rents out their apartment temporarily, for example during a stay abroad, should still be able to do so. However, landlords who use short-term rental structures on a permanent basis in order to avoid regular tenancy rules will likely face stricter limitations.

For landlords, it will become essential to document the temporary nature of the rental agreement very clearly. The duration, purpose and reason for the temporary rental should be stated precisely in the contract.

3. Furnished apartments: The furniture surcharge becomes more important

The planned reform is particularly relevant for furnished apartments.

In cities with tight housing markets such as Berlin, Munich, Hamburg or Frankfurt, furnished rental models have become increasingly common. For landlords, they were attractive because furnished apartments often allowed significantly higher rents than unfurnished apartments.

Lawmakers increasingly view this as a potential loophole to bypass the rent brake. Therefore, furnished rental agreements are expected to become more transparent.

In the future, the furniture surcharge will likely have to be shown separately in the rental agreement. It must also be reasonable. The decisive factor will be the current value of the furniture. For fully furnished apartments, a surcharge of up to ten percent of the net cold rent is currently being discussed as an appropriate benchmark.

For landlords, this means that it will no longer be sufficient to simply describe an apartment as “furnished”. They should document the furnishings in detail:

Which pieces of furniture are included?
When were they purchased?
What was the original purchase price?
What is their current value?
How is the furniture surcharge calculated?

At first glance, this may sound like a formality. In practice, however, it can quickly lead to disputes. The current value of furniture is not always easy to determine. How much is a five-year-old fitted kitchen still worth? How should a sofa, wardrobe or bed be valued? And at what point is an apartment considered sufficiently furnished?

For property managers, this means additional work. Rental agreements, inventory lists, handover protocols and annexes will need to be prepared even more carefully.

4. Index-linked rents: Automatic rent increases may be limited

Index-linked rental agreements connect rent increases to the consumer price index. If inflation rises, the rent can increase accordingly.

For many years, this was not a major issue because inflation remained relatively low. That changed with the sharp price increases of recent years.

The planned reform aims to limit index-linked rent increases in tight housing markets. Annual index increases of up to three percent would still be fully taken into account. Any increase above that level would only count by half.

Example: If the index rises by five percent, the first three percent would be fully considered. The remaining two percent would only count by half. As a result, the possible rent increase would be four percent instead of five percent.

Index-linked rental agreements are therefore not expected to disappear completely. However, they would lose part of their previous dynamic in tight housing markets.

For landlords, this raises an important strategic question: Is an index-linked rent still the best option? Or would a stepped rent or a regular rent adjustment based on the local rent index be more suitable in a specific case?

5. Grace period payments: More protection in cases of rent arrears

Another important reform concerns termination due to rent arrears.

Under current German tenancy law, if a tenant is in arrears and receives an extraordinary termination, the tenant can under certain conditions cure the termination by paying the full outstanding amount within the grace period.

In practice, landlords often issue both an extraordinary termination and, as a precaution, an ordinary termination. Until now, the ordinary termination could remain valid even if the tenant later paid the arrears.

This may change. The grace period payment could also apply to the ordinary termination in the future — at least once.

For tenants, this can be extremely important, especially if rent arrears are caused by a temporary financial emergency. For landlords and property managers, however, it creates more uncertainty, especially when dealing with tenants who repeatedly pay late.

This makes accurate documentation even more important. Property managers and landlords should be able to show clearly:

Which rent was due?
When was it due?
When was payment received?
Which arrears existed at which point in time?

Without a detailed payment history, enforcing rights in court may become more difficult.

6. Modernization rent increases: Simplified procedure may be expanded

One aspect of the reform could initially be positive for landlords: the simplified procedure for modernization rent increases may be expanded.

The threshold is expected to rise from the current 10,000 euros to 20,000 euros.

However, not every repair is a modernization. Replacing a defective window, for example, is not automatically a modernization. It becomes relevant when the measure improves the energy performance or living quality of the apartment.

A typical example would be replacing old single-glazed windows with modern triple-glazed windows. If this reduces heating demand and improves the energy standard of the apartment, the costs may under certain conditions be used as the basis for a modernization rent increase.

The important point is the distinction between maintenance and modernization. Maintenance costs remain the landlord’s responsibility. Modernization costs may, within legal limits, be passed on to the tenant.

For landlords, careful documentation is essential. Offers, invoices, technical specifications and proof of energy improvement should be collected and archived from the beginning.

7. Berlin plans a rent register: More transparency, more bureaucracy

In addition to the federal rent law reform, Berlin is discussing its own additional measure: a rent register or rent cadastre.

The idea is to collect rental data centrally. Landlords could be required to provide information such as:

address
residential location
floor
apartment size
number of rooms
equipment standard
heating type
start of the rental agreement
net cold rent
heating and operating cost prepayments
modernization surcharges

The collected data could then be compared with the Berlin rent index. If the rent is considered too high, tenants and landlords could be informed. In cases of significant overcharging, further steps such as administrative procedures or fines may become possible.

From a tenant protection perspective, this could create more transparency. From the perspective of landlords and property managers, however, it also means additional bureaucracy.

Berlin has already experienced how complicated state-level interventions in the rental market can become. The Berlin rent cap was eventually overturned by the Federal Constitutional Court. Whether a future rent register would be legally secure and practically workable remains to be seen.

For property managers, such a register would certainly create additional responsibilities: collecting data, reporting changes, explaining rent structures and responding to official requests.

8. The Heating Law becomes the Building Modernization Act

The second major topic is the reform of the German Building Energy Act, widely known as the Heating Law.

The previous law was politically controversial. The new government wants to reform it and present it under the name Building Modernization Act.

The current Building Energy Act requires new heating systems to be operated with at least 65 percent renewable energy under certain conditions. For new buildings in new development areas, this requirement has already applied since January 1, 2024. For existing buildings, transitional rules are closely linked to municipal heat planning.

The planned reform is intended to be more technology-open. Gas and oil heating systems are therefore not expected to be banned outright.

However, this does not mean that everything will simply return to the old system. The political goal remains clear: the building sector should gradually move away from fossil fuels.

In other words: Even if the new law promises more flexibility, the pressure to modernize heating systems will remain.

9. Technology openness sounds good — but who pays the extra costs?

According to the current political direction, new gas and oil heating systems may remain possible. However, they are expected to use increasing shares of climate-friendly fuels over time.

This could include biomethane, biogenic liquefied gas or hydrogen-based energy sources.

The problem is availability and price. These fuels are not yet available in sufficient quantities, and they are likely to be more expensive than conventional natural gas or heating oil.

This creates a new conflict: Who pays the additional costs?

Tenants are supposed to be protected from excessive heating costs. At the same time, landlords cannot fully control energy prices if legal requirements push buildings toward certain supply models.

According to current discussions, some costs may have to be shared between tenants and landlords in the future. This could include parts of CO₂ costs, gas network charges and additional costs resulting from the required share of climate-friendly fuels.

For landlords, this is a major change. Costs that were traditionally passed on to tenants through operating cost statements could partly remain with the property owner.

10. Energy modernization: Between climate goals and affordability

There is no question that Germany’s building stock needs modernization. Many apartment buildings in Berlin, eastern Germany and other regions were comprehensively renovated in the 1990s. After roughly 30 years, many of these buildings are now entering a new cycle of maintenance and modernization.

Roofs, façades, windows, heating systems, pipes and technical equipment will need to be renewed. At the same time, construction costs, labor costs, financing costs and legal requirements have increased significantly.

For private landlords, this can become a serious financial burden. Owning one or two apartments does not automatically mean having large financial reserves. Many private landlords rent out their apartments at moderate prices and want to preserve their property in the long term.

However, if new legal obligations, documentation duties and cost risks continue to accumulate, some landlords may decide to sell instead of continuing to rent.

This can become a problem for the housing market. If private landlords sell their apartments, these homes do not automatically return to the affordable rental market. They may be bought by owner-occupiers or used differently. As a result, the rental supply may shrink further.

11. What does this mean for tenants?

For tenants, the planned reforms offer more protection and transparency.

Furnished apartments should become more transparent. Short-term rental models should no longer be used indefinitely to bypass regular tenancy law. Index-linked rents should be limited in tight housing markets. Tenants with temporary payment difficulties may receive more protection against losing their home.

However, these reforms do not solve the fundamental problem: there is not enough housing.

If too little is built, construction costs remain high and private landlords withdraw from the market, the housing shortage will continue.

The same applies to heating costs. Even if landlords are required to cover part of certain additional energy costs, this does not automatically make housing cheaper. Rising energy prices, modernization expenses and operating costs may still place a heavy financial burden on households.

12. What does this mean for landlords?

For landlords, the pressure to act is increasing.

Anyone renting out residential property in Germany will need to document, justify and review more details than before.

The most important areas include:

legally sound rental agreements
transparent furniture inventories
clear calculation of furniture surcharges
correct application of the rent brake
precise documentation of rent arrears
legally compliant modernization notices
clear separation of maintenance and modernization costs
long-term planning for heating and energy modernization

Private landlords should not wait until new rules come into force. Those who review their rental agreements, organize their documents and plan future modernization steps early will be better prepared.

13. What does this mean for property managers?

Property managers are caught in the middle.

They must implement legal requirements, advise owners, inform tenants, monitor deadlines and mediate conflicts.

The planned reforms are unlikely to reduce administrative work. On the contrary: rent law, operating costs, heating systems, energy modernization, subsidy programs, rent registers and modernization rent increases are becoming increasingly interconnected.

For property managers, this means:

more communication,
more documentation,
more legal review,
more explanation,
more conflict management.

In condominium owner associations, energy modernization will become one of the most important topics of the coming years.

Which heating system makes sense?
Is district heating available?
Can a heat pump be installed?
Are subsidies available?
How are costs distributed?
Which owner resolutions are required?

These questions cannot be answered in a general way. Every building must be assessed individually.

14. Conclusion: Good intentions, difficult implementation

The Rent Law Reform 2026 and the planned Building Modernization Act pursue goals that are understandable from a social and political perspective: affordable housing, more transparency, stronger tenant protection and climate-friendly buildings.

The real challenge lies in implementation.

More tenant protection should not lead to private landlords withdrawing from the rental market. More energy requirements should not financially overwhelm owners, condominium communities, landlords and tenants. And more transparency should not become a bureaucratic burden that mainly falls on property managers and private landlords.

The housing market does not only need new rules. It needs more housing, reliable subsidy programs, practical modernization concepts and a balanced relationship between the interests of tenants and landlords.

For property owners, landlords and property managers, the coming months should be used wisely. Rental agreements, documentation, modernization plans and heating strategies should be reviewed in good time.

Even if not every detail has been finalized yet, the direction is clear: renting out property in Germany is becoming more complex.

Those who prepare early can avoid conflicts — and make better long-term decisions for their property.