If a landlord increases the rent after modernization, he must clearly disclose any third-party funds such as state subsidies for energy-related renovations to tenants in the declaration. According to a ruling by the Federal Court of Justice (BGH), such information should be used to enable tenants to check the reason and extent of the rent increase for plausibility and decide whether they should consult legal or structural experts, for example.

If the landlord pays for modernization measures with the help of low-interest or interest-free loans from public budgets, through loans or rent advance payments from the tenant, through services provided by a third party for the tenant or with funds from the federal and state financing institutions, this reduces the rent increase accordingly. This should ensure that the landlord is not better off than others who finance renovations from their own assets.

In the specific case from Berlin, the landlord had not given any information on eligible third-party funds in the text of the declaration of increase. However, he referred to a letter of announcement about the renovation, according to which he wanted to apply for funds from the Reconstruction Loan Corporation (KfW) for energy-efficient measures. The plaintiff considers the declaration of the rent increase to be invalid for formal reasons.

From the point of view of the BGH, the information remains open as to whether the landlord received the subsidy but did not state it and did not offset the reduction amounts – or whether the application was rejected or the funds granted were not to be offset against the costs of the modernization measures. “It is also conceivable that the defendant simply forgot to explain the third-party funds,” it said.

After the district court of Berlin-Wedding had upheld the tenant’s complaint and the landlord’s appeal to the district court of Berlin failed, the BGH in Karlsruhe now also rejected his appeal against the verdict.