The Bugbear Rent Control – We are Showing you Simple Ways for an Implementation

Now it’s through! Since the German parliament (the so called Bundestag, constitutional and legislative body in Germany) has already passed the rent control in the beginning of March 2015 now the federal assembly (the so called Bundesrat, legislative body that represents the sixteen federal states of Germany) has agreed on it as well. From 1st June 2015 on the following rule applies: A re-letting base rent can only exceed a maximum of ten percent above the comparable rent in the particular area. What appears simple in theory may lead to significant additional expenses in practice. The local rent index has to be taken into account, the upper rent limit has to be calculated and additionally every exemption clause has to be noted. To support this systematically, PROMOS offers you a variety of solution approaches, which can be adjusted to your individual requirements and conditions.

Since the beginning of this month the federal states are allowed to implement an additional rent limit when new letting in areas with a tight housing market. A situation is declared tight as soon as the rent or rent increase lays above the average in this state-area. Though, the rent limit neither applies to apartments, which were rented for the first time after 1st October 2014, nor for apartments, which have been modernized comprehensively. The rent limit also doesn’t apply to apartments, which already exceeded the maximum of ten percent above the comparable rent in the particular area in the previous tenancy agreement. In this case the previous rent can still be claimed.

When determining a rent there are numerous special rules and exceptions that need to be taken into account in order to act legal and to exhaust all potentials within the pricing at the same time. PROMOS has developed different individual solution approaches to simplify the implementation of the new legislations for the moderation of the rising rent in your SAP® system:

1.     Create a data basis
The local comparable rent forms the basis to calculate the upper rent limit. In order to have it calculated automatically by the SAP® system the data of comparable rent in this area needs to be maintained in the system. PROMOS integrates these data either as a statistical condition in the rental object or depicts it in an additional field in the SAP® system.

2.     Exhaust potentials
For the purpose of determining the highest amount of a rising rent in a new letting easily and quickly, the assessment type “rent control” is implemented by PROMOS. For each rental object the maximum percentage of rent compared to the local rent can be maintained – as of now about ten percent. With the help of PROMOS.GT “bulk maintenance for rental objects” this assessment type for many rental objects can be maintained in order to keep the maintenance effort as low as possible. At the same time the validity of assessment type can be determined. As a result you can quickly see the amount or percentage the rent may be raised to when new letting without any additional effort in your SAP® system.

3.     To be in line with the law
The compliance of the determined rent and the new legislation for the moderation of the rising rent can be checked additionally with two different validity mechanisms. When setting up a new tenancy agreement, the system automatically checks whether the rent exceeds the comparable local rent by ten percent. If this is the case, the rent is matched with the conditions of the previous tenancy agreement. If one of both control mechanisms detects inadmissibility, the new tenancy agreement cannot be saved or activated in SAP®. This way the danger of breaking the new law is prevented.

These introduced solution approaches are first drafts for a possible implementation. There is much more room for your individual requirements and suggestions. As your reliable partner for the real estate management our PROMOS consultants would love to advise you in implementing a solution for the depiction of the rent control quickly and efficiently. Please feel free to ask and contact us!

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