Inflation Reduction Act under lease law - rent control, value protection and time limits
With the 5th Inflation Reduction Act under Lease Law (5. MILG), the legislator is taking the next step towards curbing inflation-related rent increases and strengthening legal certainty in lease law. Three areas in particular will be newly regulated: the possibilities of fixed-term lease agreements, the future permissibility and design of value protection clauses and the handling of ineffective value protection clauses agreed in the past. The centerpiece is the new Rent Value Assurance Act (MieWeG). It creates a standardized system for the value protection of rents and acts as a "rent brake" for the entire residential rental market. The changes come into force on January 1, 2026.
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New Rental Value Protection Act (MieWeG)
In future, the MieWeG will limit the contractually agreed value adjustments in residential rental agreements (both in the full and partial area of application of the MRG) and sets a narrow framework for their feasibility. Even freely agreed rents may only be increased in accordance with this statutory model.
The index is adjusted once a year on April 1. The basis is the average inflation of the previous year. An inflation rate of up to 3 % is passed on in full. Only half of anything above this may be passed on to the tenants. For cases where the MRG is fully applicable, lower maximum values also apply in the first two years. The rules also apply to existing lease agreements, meaning that further adjustments will only be permitted from April 1, 2026 at the earliest and only in accordance with the new scheme. In future, value adjustment clauses can be agreed by simply referring to Section 1 (2) MieWeG (also for commercial leases). In any case, on this point the legislator has created the degree of legal certainty desired by practitioners, eliminating the need to constantly adapt contractual clauses to changing case law.
Ineffective value protection clauses in old contracts
The law is particularly important for existing tenancies with ineffective value retention clauses. Tenants' claims for repayment are restricted. In principle, only those payments that were made in the last five years before the end of the contract or in the last five years before knowledge of the invalidity can be reclaimed. In addition, a subjective limitation rule has been introduced: The limitation period for claims for repayment is now three years from knowledge of ineffectiveness and the claim, provided that the 30-year maximum period has not yet expired since the payment.
On the one hand, this is intended to create legal certainty and, on the other hand, to prevent reclaims from reaching "into the boundless".
changes to fixed-term contracts
The 5th MILG also provides for a significant adjustment to fixed-term tenancies. The minimum duration of fixed-term lease agreements is extended from three to five years (within the scope of application of the Tenancy Act) if the landlord acts as an entrepreneur within the meaning of the Consumer Protection Act. For constellations in which the landlord is not an entrepreneur (classic private letting), however, the minimum term of three years remains unchanged. The aim of this differentiation is to give tenants in typical consumer constellations longer-term stability without placing an excessive burden on small private lettings.
The new regulations have a direct impact on current and future tenancies. Whether value protection, rent increases or time limits - many clauses will have to be reviewed or adapted from 2026.
Are your previous rent adjustments effective? Will your contracts have to run longer in the future?
We will be happy to advise you on all the necessary steps!
Noemi Heinzle | Paralegal
