Two instruments cap German rents – and they are constantly confused: the Mietpreisbremse ("rent brake") applies at re-letting, the Kappungsgrenze ("increase cap") during an ongoing tenancy. Neither term translates cleanly, so we keep the German.
"If a residential lease is concluded in an area with a strained housing market, the rent at the start of the tenancy may exceed the customary local comparative rent by no more than 10 percent."
— § 556d (1) BGB (translated)
The rent brake (§§ 556d ff. BGB)
Applies only in areas designated by state ordinance (Berlin, Munich, Hamburg, most university cities; extended through 2029). Exemptions: new construction (first let after 1 Oct 2014), comprehensive modernisation, and a higher previous rent. Tenants can reclaim overpaid rent with a simple written objection.
The increase cap (§ 558 (3) BGB)
Increases up to the local comparative rent are limited to 20% within three years – 15% in strained markets. It caps the pace, not the destination: the comparative rent remains the absolute ceiling.
What neither covers
Modernisation levies (§ 559 BGB) and index or stepped rents follow their own rules; furnished short-term lets partly slip through. For managers: document both checks – designated area and three-year window – before any increase.