Applicability of rent control for furnished flats
Due to misleading wording in many media outlets and, in some cases, misinformation, there is a widespread misconception that rent control does not apply to the letting of furnished flats. This statement is not correct across the board, as § 549 I BGB excludes the applicability of the rent cap within its scope only for certain constellations and thus only in exceptional cases. In practice, the following constellations are particularly relevant:
- Living space that is only rented for ‘temporary use’ and
- Living space that is part of the flat occupied by the landlord and which the landlord is required to furnish with most of the furnishings, provided that the living space is not let to the tenant for permanent use with his family or with persons with whom he shares a permanent household
The first case (short-term rental) is mentioned in § 549 I Nr. 1 BGB and refers to a rental for temporary use, whereby the rental parties determine in advance the period for which the rental agreement is to exist; The reasons for this must lie within the tenant’s sphere of influence. Accordingly, a rental for temporary use can be either a furnished or unfurnished flat; the only factor determining the applicability of the rent control is the actual intended rental period. Whether the flat is furnished or not is irrelevant.
The second case is regulated and covered by § 549 I Nr. 2 BGB the classic flat-share situation, in which the landlord lives in the flat himself and (therefore usually) furnishes it predominantly with his own furniture. In this case, the rent control law does not apply. If the entire living space is made available to the tenant for permanent use with his family or persons with whom he shares a permanent household, § 549 I Nr. 2 BGB does not apply, meaning that the rent control law applies. The furnishing of an apartment and the duration of the tenancy must therefore always be considered separately.
Furthermore, there are no regulations governing ‘furnished accommodation’ under the law. The fact that certain tenants rent furnished accommodation due to private or professional commitments does not in itself lead to exclusion from the rent control provisions. The decisive factor for the applicability of the rent control according to § 556d BGB is primarily whether a case of § 549 BGB. Temporary use of the rented property in the above sense according to § 549 I Nr. 1 BGB is determined by whether the purpose of living ultimately prevails. Residential use prevails if the rented flat is the tenant’s centre of life in the sense of a social sphere, i.e. the establishment of social contacts and relationships, as well as professional and private life. The flat must therefore be the tenant’s spatial centre of life; a specific duration is not relevant in this context. The background to this is that the social sphere of tenancy is particularly worthy of protection, and therefore merely temporary use in the above sense does not require this special protection and is therefore not subject to the scope of the rent control law. Whether the parties can effectively agree on ‘temporary use’ is determined by the actual circumstances and not by the contractual agreement. It is also insufficient that a relatively short contract term was agreed. Here, too, it should be noted that furnishing the flat does not lead to a different result, as this must be considered independently.
Parallel market for furnished accommodation?
It is questionable whether the usual rent index can also be used to determine a local comparative rent. In the opinion of the Berlin Regional Court, there may be a separate submarket for furnished flats, for which a separate, local comparative rent must then be determined by expert evidence. According to the Berlin Regional Court, there may be a separate submarket for furnished flats, for which a separate, locally customary comparative rent must be determined by expert evidence. (Berlin Regional Court, judgment of 13 September 2023 – 67 S 51/22). However, this assessment is contradicted by the final report of the empirical and legal study of the furnished rental housing market commissioned by the Federal Ministry of Justice and conducted by the consulting firm Oxford Economics. The final report from June 2023, following an SSNIP test that makes it possible to identify individual submarkets from the perspective of housing demand, concludes that the furnished housing market does not constitute a separate market.
Whether the rent index can be used for furnished flats or whether a local comparative average must be determined separately is still to be decided by the highest court. Regardless of this, the rent cap still applies to furnished flats as a rule.
Furnishing surcharges
The rent cap therefore generally applies to furnished flats. A flat within the meaning of § 549 II Nr. 2 BGB is furnished if the landlord is obliged to provide the furniture in a condition that complies with the contract, i.e. has a contractual obligation to furnish the property. Such an obligation to furnish the property can be stipulated in the contract, and the parties are free to regulate the scope of this obligation. If the landlord is obliged to provide the furniture in a condition that complies with the contract, he is also responsible for any defects in the furniture. A property is only considered to be fully furnished if the landlord has furnished the flat predominantly with his own furnishings, meaning that the flat is immediately habitable. For this to be the case, it is essential that all essential furnishings are present. The presence of individual pieces of furniture alone is not sufficient for furnishing in accordance with § 549 II Nr.2 BGB. It is also irrelevant whether the furniture in question is particularly valuable or high-quality or whether it is built-in furniture. Essential furnishings are therefore required, i.e. tables and seating, living room furniture, a fully equipped kitchen in working order, lamps and a washing machine. If these conditions are not met, the property is not considered to be fully furnished and a furniture surcharge may not be levied.
According to a ruling by the Kammergericht (KG GE 1980, 863), which was confirmed by the Landgericht Berlin (LG Berlin GE 2003, 954) , the calculation must be based on the current value of the furniture provided at the time of the request for an increase. In Berlin, according to case law, 2% of this current value (the value in use for the tenant, which corresponds to the replacement value) is applied linearly over ten years per month. However, the depreciation and interest rate to be applied in individual cases is not undisputed, which means that case law on fair market value may vary from state to state, making it necessary to consider each case individually. In Hamburg, the calculation is based on the so-called Hamburg model. Here, too, the fair market value of the furniture provided at the time of the request for an increase is used as a basis, but the depreciation period is 7 years instead of 10 years and the maximum pro-rata annual interest rate may not exceed 15%. Since the furniture surcharge should adequately reflect the utility value for the tenant, any corresponding depreciation due to the passage of time, whether the furniture is new and the tenant’s use must be taken into account. In addition, depending on the residential area, certain furnishings such as a fitted kitchen may already constitute a typical feature of the property that influences the rent, in which case a furniture surcharge is not applicable. If the furniture surcharge is to be included in the basic rent, this must be clearly stated in the contract, but the amount of the furniture surcharge and the basis for calculation do not have to be disclosed in the contract. However, landlords often arbitrarily set this furniture surcharge too high or, in the case of a second occupancy of the furnished flat, use the replacement value of the furniture as the basis for calculating the furniture surcharge, thus using an incorrect basis for calculation. As a result, this can lead to an excessively high total rent. For fear of termination, many tenants pay the excessive rents without questioning them. This fear is unfounded, as the tenant has a legal right to information from the landlord regarding the composition of the rent in accordance with § 556g BGB.
JUR | URBAN ADVISES YOU ON QUESTIONS REGARDING THE SO-CALLED RENT CONTROL. DO YOU HAVE ANY QUESTIONS?