The Federal Government has presented the draft bill for the so-called "Mietrecht II" (Tenancy Law II). The goal is to protect tenants in metropolitan areas and tight housing markets more strongly against extreme cost increases. For private landlords and investors in the Rhineland (especially Cologne, Düsseldorf, and Bonn), major changes will arise.
The Key Points of the Planned Reform
The draft proposes tightening in four central areas that directly influence the daily rental business:
1. Cap on Index Rents
Index lease agreements have enjoyed great popularity among landlords in recent years due to inflation. The legislature now plans to cap increases for index rents in areas with tight housing markets at a maximum of **3.5% per year**. If the consumer price index (CPI) rises faster, any increase above that is lost for the landlord.
2. Strict Rules for Furnished Rentals
So far, many landlords have used furnishing to legally bypass the rent cap, as the furnishing surcharge did not have to be transparently disclosed. The new draft obliges landlords to full transparency in the future: the surcharge for furniture must be separately stated in the lease agreement and demonstrably justified (reference value: approx. 5% of the current fair value of the furniture).
3. Extension of the Rent Cap
The legal basis for the federal states to decree the rent cap in tight housing markets is to be extended by another five years until **December 31, 2029**. This means the instrument remains permanently active in cities like Düsseldorf and Cologne.
4. Grace Period Payment Also for Ordinary Termination
Previously, if a tenant settled their rent arrears within two months of being served the eviction lawsuit (grace period payment), the termination without notice became invalid. However, an ordinary termination issued at the same time remained valid. In the future, the grace period payment should also be able to cure the ordinary termination, making it harder for landlords to part with defaulting tenants.
Practical Tip for Landlords & Investors
Due to the planned tightening of index rents and furnishing, landlords should adapt their strategy for new rentals:
- Optimize Lease Agreements: Instead of rigidly relying on index rents, stepped lease agreements (Staffelmiete) can be more predictable and legally secure in some locations, as they are not affected by the current draft bill.
- Document Furnishing: Meticulously record purchase invoices, photos, and the age of all pieces of furniture in an inventory list to be able to precisely prove the furnishing surcharge in case of a dispute.
- Tighten Credit Checks: Since the right of termination for rent arrears is being softened, a complete credit check (Schufa, certificate of rent paid, salary slips) before signing the lease is more important than ever.
Outlook & Entry into Force
Since the legislative process is currently in parliament (as of May 2026), individual details may still shift. The first regulations are expected to enter into force in late 2026 or early 2027. We keep our clients updated on the current status and adapt contracts in good time.
Note on source: This article is based on the official publications and draft bills of the Federal Ministry of Justice (BMJ) on the planned tenancy law reform package "Mietrecht II". The content was carefully analyzed by the ImmoLevia editorial team, independently formulated, and prepared in a practical way for our readers.