Landlords should make friends with their tenants

Modernization levy

You can pass on the cost of a new solar system to the tenant. In this article you can read why tenants fear the modernization surcharge and how you can behave.

What is a modernization levy?

Before speaking of a modernization surcharge, this procedure must be distinguished from other renovation work. A distinction is made here between actual modernization processes and maintenance measures. This difference is especially important to you. While you have to pay for maintenance or renovation measures yourself when you move out, you can allocate modernization measures to the rental amount. The rent will be increased and the costs will be paid off.

Conservation measures are for example:

  • Heating repairs
  • Window renovation
  • Bathtub renovation
  • Pipe replacement

Too ordinary Modernization arrangements count against it:

  • Installation of a solar system
  • Installation of water meters
  • Installation of an elevator
  • Improve thermal insulation

Calculation of the modernization levy

New water meters are needed, an elevator should make life easier for the many seniors in the house or the thermal insulation should finally work better. The costs are paid by the tenant as modernization levies - and therefore harbor considerable potential for conflict.
In order not to damage the tenant's trust too much, you should of course keep the rent increase as low as possible. There are clear rules here. A few years ago, as a landlord, you were allowed to allocate eleven percent of the modernization costs to one year's rent. Since the beginning of 2019, this percentage has been reduced to eight percent. However, this law does not apply to every property. Only as a landlord in metropolitan areas do you have to get used to this rule for at least the next few years until the law is reconsidered. It is also important to know that the monthly rent may not increase by more than three euros per square meter within a period of six years. The main aim of this law is to prevent landlords from using the allocation of modernization costs as a way of getting rid of current tenants. Incidentally, this procedure is also punishable and can result in fines of up to € 100,000.

A scheme for calculating a modernization levy can look like this:

Modernization costs20.000 €
8% modernization fee (annual rent)1.600 €
Increase in monthly rent133,33 €

When do you have to notify your tenants of the modernization?

Before any modernization can be undertaken, you must give your tenants advance notice. A modernization measure must be carried out both in the event of a future rent increase and in the event of a renewal at no cost to the tenant. You have to inform each tenant about the planned project in writing. If an increase in rental costs is planned, a possible amount must also be stated. Such a letter must be sent at least three months before the start of the work. The letter must contain a description and justification of the modernization work. In order not to lose the trust of your tenants, additional transparency is recommended. Your letter should include the following:

  • Exact total cost of the arrangements
  • Difference between the planned measures and maintenance costs
  • Exact individual costs of the various work steps

Can your tenants refuse the modernization?

Tenants have relatively few options for preventing modernization measures. The premise for this is the obvious improvement of the property through the modernization. Such improvements can be increased living space or energy saving measures.

The only option for tenants is in cases of so-called special hardship. Such cases include:

  • pregnancy
  • illness
  • Weakness from age
  • Important exams
  • Heating or window conversion in winter
  • Precautions shortly before moving out

If tenants want to invoke cases like this, they have to be proven. Important exams or illness can be confirmed, for example, by a medical certificate or a school and university certificate. If one of your tenants has a low income, the work of the craftsmen will still continue. Only after the rental costs have risen can the tenant plead his economic situation.

How long does a modernization levy apply?

The costs of the modernization measures are deemed to have been paid after 12.5 years. This applies to the valid percentage of eight percent. Nevertheless, tenants still have to pay the increased rental costs.
Promotion of a modernization?

In addition to the allocation to the rental costs, you can still apply for funding for the renovation. Since renovations and modernizations such as bathroom refurbishment cost a lot, it is understandable that you as a landlord cannot take this burden on yourself.

Our tip to you

Before undertaking a modernization measure, you should check the necessity. Since the allocation of the modernization costs to the tenants can cause a lot of disputes, we also recommend that you communicate with your tenants as transparently as possible. This enables them to understand why these precautions are important and why the rent will increase.