Rent reduction

Rent reduction / Die Mietminderung

May 09, 2023

What is a rent reduction?

Section 535 BGB regulates the content and main obligations of the tenancy agreement. According to Section 535 (1) of the German Civil Code (BGB), the landlord/landlady is obliged to grant the tenant the use of the rented property during the rental period and to leave the rented property to the tenant in a condition suitable for use in accordance with the contract and to maintain it in this condition during the rental period. On the other hand, the tenant is obliged to pay the landlord/landlady the agreed rent pursuant to section 535 (2) BGB. The rent reduction has two functions: On the one hand, the tenant should only pay what is reasonable, on the other hand, he/she should be able to use his/her reduced rent payment to "put pressure" on the landlord/landlady to remedy the defect and make the object available to the tenant (again) in a condition in accordance with the contract.

Under what conditions can a rent reduction be claimed?

If the landlord/landlady does not receive the rental object in a condition in accordance with the contract, i.e. if the object is "defective", the tenant is entitled to certain rights regarding defects. In particular, the tenant may reduce the rent in accordance with section 536 (1) BGB. If the suitability for the contractual use is completely removed, the tenant is completely released from the obligation to pay rent (paragraph 1 sentence 1), if the suitability is only reduced, the tenant is only obliged to pay a reduced rent. According to section 535 (1) sentence 3 BGB, however, a rent reduction is excluded if there is only an insignificant reduction in suitability.

The special feature of the rent reduction according to section 536 BGB is that the rent is "automatically" reduced - the tenant "owes" no more (and no less) than the reduced rent.

Defect in the rented property

A defect of the rental object exists if the actual condition of the rental object (actual condition of the flat) deviates negatively from the target condition (condition in which the flat should usually be). All kinds of negative deviations come into consideration here. The flat itself can be "defective", e.g. if the windows leak or the flat cannot be heated. However, the defect can also affect the apartment from the outside, e.g. noise from a restaurant or construction work on a neighbouring house. Measures intended to improve the quality of living, such as modernisation or repair measures, e.g. after water damage, also constitute a defect and may entitle the tenant to a rent reduction. For the qualification of the circumstance as a defect, it is irrelevant whether the landlord/landlady is responsible for the defect.

Tenant's duty of disclosure

However, a rent reduction cannot be claimed in every case. The tenant must report defects to the landlord/landlady immediately after their discovery in accordance with section 536 c BGB. If he/she fails to do so, he/she loses his/her reduction rights under section 536 BGB. Even if the tenant is aware of the defects and accepts the rental object without reservation, he/she loses his/her rights in this respect. If, for example, the tenant knows at the time of handing over the rented property that the windows are leaking, he/she can no longer claim this as a defect entitling him/her to a reduction - however, the tenant can very well demand the replacement of the defective windows.

The actual reduction of the rent

If the tenant recognises a defect entitling him/her to a reduction and has reported this to the landlord, the rent is automatically reduced, as already shown. This means that the tenant only has to pay an appropriate rent. The amount of the rent reduction basically depends on the extent of the impairment of the contractual use. The rent reduction is to be made on the basis of the warm rent, i.e. the gross rent, this was decided by the Federal Court of Justice in its ruling of 6 April 2005 (XII ZR 225/03).

Adequacy of the reduction

In practice, the problem for many tenants is that it is completely unclear to them what rent is "reasonable". This is therefore dangerous for the tenant, as a too high reduction may justify termination for non-payment of rent - the tenant cannot, of course, reduce the rent by 100% because of minor defects, e.g. because of a defective electric circuit in only one room. The tenant can get a rough guideline from so-called rent reduction tables - these summarise the case law on individual defects and set a certain reduction amount in percent. Rent reduction tables are not legally binding and should be treated with caution, as the court decides on the basis of the individual case.

For this reason, it is advisable for the tenant to proceed in such a way that the rent continues to be paid "in full", but with the reservation that any overpaid rent is reclaimed. This is the safest course of action for the tenant, since, as already mentioned, the tenant may be threatened with termination if the reduction of the rent was unjustified. If the tenant continues to pay the full rent without reservation, he/she does not waive the rent reduction in the future, but a reclaim of the overpaid rent is possibly excluded due to section 814 BGB (knowledge of non-debt).

Possible exclusion of reduction in the tenancy agreement?

The right to reduce the rent cannot be excluded by a provision in the tenancy agreement, this is made clear by section 536 (4) BGB. Contractual clauses and agreements to the contrary are invalid. In practice, however, the statutory exclusion of the right to reduce rent pursuant to section 536 (1a) BGB is very relevant in the case of energy modernisation measures within the meaning of section 555 b No. 1 BGB (link to modernisation measures). Whether this regulation is constitutional is disputed.

Right of retention in addition to rent reduction

Of interest to the tenant is the possibility of asserting a right of retention with regard to the rent in the case of a defect in addition to the rent reduction. This procedure enables the tenant to withhold further parts of the rent in addition to the amount of the reduction.