Index rent cap 2026: for increases above 3%, only half may be passed on to tenants.
The tenancy law reform (Mietrecht II) intends that for index-linked leases, only half of the portion of annual inflation above 3% may be passed on to tenants.
Check your index rent for freeWhat does this mean for you?
With an index-linked rent (Indexmiete, § 557b BGB), your rent follows the consumer price index. Under the planned tenancy law reform 2026 (Mietrecht II), the rule is to be: if the index rises by more than 3% in a year, only half of the portion above 3% may be passed on to you. The first 3% remain fully passable; the rest is halved. The rent control rules (Mietpreisbremse) already apply to the initial rent of an index-linked lease today – the reform does not change that.
The key facts at a glance.
An index-linked rent ties your rent to inflation. In years of high inflation, this can lead to steep jumps – and that is exactly where the planned cap comes in.
Legal basis: § 557b BGB
The 3% rule
Status of the bill
Rent control stays
What the tenancy law reform 2026 changes about index-linked rent.
With an index-linked rent (§ 557b BGB), the rent follows the consumer price index published by the Federal Statistical Office (Destatis). If the index rises, the rent rises – so far by the full amount of the increase. In years of strong inflation, that means painful rent increases for tenants, over which they have no influence.
Mietrecht II (Drs. 21/6807) aims to dampen this automatic mechanism: the annual index rise may still be passed on in full to tenants up to a threshold of 3%. Only half of the portion of the rise above 3% is to flow into the rent. This is why people speak of the "halving rule above 3%" or the "3% rule" for index-linked rent.
Important: rent control (Mietpreisbremse) for index-linked leases is unaffected by this. It concerns the permissible initial rent, whereas the new cap concerns the subsequent index adjustments. You can find more on the basics on our index rent page.
The first 3% can still be passed on in full
An index rise of up to 3% per year can still be passed on to tenants in full. In normal years, therefore, little changes.
The portion above 3% is halved
If the index rises by 8%, say, the first 3% count in full – of the remaining 5 percentage points, only 2.5 count. The effective increase would then be around 5.5%.
Protection precisely in high-inflation years
The cap takes effect where it matters most: in years of high inflation, when index-linked rents would otherwise rise particularly sharply.
The halving rule above 3% in concrete figures.
Suppose your net rent (excluding service charges) is €1,000 per month. This is how the effective index increase would develop under the planned rule, depending on the index rise. The first 3% count in full, the rest only by half.
How to read the formula: effective increase = 3% + (index rise − 3%) ÷ 2
For simplicity, the examples assume a round annual index rise and a starting rent of €1,000. The actual increase depends on your specific contract, the relevant index period and on whether the reform is passed in this form. Run the numbers with your real figures – or have your contract checked free of charge.
Where, for whom and from when the new rule is to apply.
Three key questions arise around the index rent cap 2026: Does it apply only in tight housing markets? Does it also apply to existing contracts? And when does it come into force? Here is the status after the first reading.
Only in tight housing markets?
Under the draft, the cap – like rent control – is to be tied to areas with a tight housing market designated by a federal state by statutory order. Outside such areas, it is unlikely to apply.
- Check whether your location is covered
Also for existing contracts?
It is being discussed that the cap should apply to future index adjustments – i.e. also to existing index-linked leases, as soon as the next increase falls due after the law takes effect. It is not expected to apply retroactively to earlier increases.
- Likely to apply to future adjustments
- No retroactive effect expected
When does the rule come into force?
Mietrecht II (Drs. 21/6807) had its first reading on 9 July 2026. Before it can take effect, committee deliberations, the second and third readings and the Bundesrat (Federal Council) are still required. No binding start date has been set yet.
- Not yet in force
- Further readings still pending
Who is affected by the index rent cap.
The planned rule targets tenants with an index-linked lease. These features indicate that you are one of them.
What index-rent tenants can do now.
You don't have to wait for the reform to come into force. You can already check today whether your initial rent or an index increase is too high – and what you can claim back.
Dig out your lease and the increase letters
Check whether an index-linked rent under § 557b BGB has been agreed and which index period the increases are based on.
Have your initial rent checked for free
With a few details about your flat, Conny determines whether your starting rent breaches the rent control rules – with no obligation whatsoever.
Decide and let us enforce your rights
If the check shows potential savings, you can instruct Conny. We take care of the formal objection (Rüge), all communication and – if necessary – enforcement in court.
Are you paying too much on your index-linked rent?
Index-linked rent is a special case – and that is exactly our strength.
Index-linked rent, rent control and the upcoming cap interact with one another. Which rule applies in your case and how much you can claim back comes down to the details of your contract.
Conny has been enforcing tenants' rights for 10 years and specialises in rent control – including for index-linked and graduated (stepped) rent agreements. You bear no cost risk: you only pay if we succeed.
Specialised in rent control
We specifically check whether your initial rent under an index-linked lease was permissible – a highly specialised area of tenancy law.
No cost risk
The check is free. A commission is only due if we successfully secure a rent reduction for you.
Digital and convenient
Initial assessment online in just a few minutes. We handle all communication with your landlord.
Index rent cap 2026 – frequently asked questions
What is an index-linked rent?
With an index-linked rent (Indexmiete, § 557b BGB), the rent is tied to the consumer price index calculated by the Federal Statistical Office. If the general cost of living rises, the landlord can adjust the rent accordingly – usually once a year. You can find more on the basics on our index rent page.
What does the tenancy law reform 2026 change about index-linked rent?
Mietrecht II (Drs. 21/6807) aims to cap index increases: if the index rises by more than 3% in a year, only half of the portion above 3% may be passed on to tenants. The first 3% can still be passed on in full.
How does the 3% rule work in practice?
Put simply: effective increase = 3% + (index rise − 3%) ÷ 2. With an 8% index rise, that would be 3% + 2.5% = 5.5%. On a net rent of €1,000 (excluding service charges), that equals +€55 instead of +€80.
Does the cap apply only in tight housing markets?
Under the draft, the cap is to be tied to areas with a tight housing market designated by a federal state by statutory order – similar to rent control. Outside such areas, it is unlikely to apply.
Does the new rule also apply to existing index-linked leases?
It is being discussed that the cap should apply to future index adjustments – i.e. also to existing contracts, as soon as the next increase falls due after the law takes effect. Retroactive application to earlier increases is not expected.
When does the rule come into force?
Mietrecht II had its first reading on 9 July 2026. Before it takes effect, committee deliberations, the second and third readings and the Bundesrat still follow. No binding start date has been set yet.
Does rent control apply to an index-linked rent?
Yes. Rent control (Mietpreisbremse, § 556d BGB) applies to the initial rent even under an index-linked lease. The widespread belief that it is suspended for index-linked rent is wrong. If your starting rent was too high, you can have it checked regardless of the reform. See also: rent control.
What can index-rent tenants do right now?
You don't have to wait for the law: have your initial rent and previous increases checked free of charge. Our page on permissible rent increases also explains which increases are allowed.
Find out in 2 minutes whether your index-linked rent is too high.
Free check. No upfront payment. You only pay if we succeed. Your tenancy is protected.
Check your index rent for freeLast updated: October 2026. This page describes an ongoing legislative process (Mietrecht II, Drs. 21/6807) and does not constitute legal advice.