(1) The lessor may demand approval of an increase in rent up to the reference rent customary in the locality if, at the time at which the increase is to occur, the rent has remained unchanged for 15 months. The demand for a rent increase may be made at the earliest one year after the most recent rent increase. Increases under sections 559 to 560 are not taken into account.
(2) The reference rent customary in the locality is formed from the usual payments that have been agreed or, with the exception of increases under section 560, that have been changed in the last six years in the municipality or in a comparable municipality for residential space that is comparable in type, size, furnishings, nature and location, including the energy systems and its characteristic features. Residential space for which the amount of rent has been stipulated by law or in connection with a promise of sponsorship is exempt.
(3) In the case of increases under subsection (1), the rent may not be raised within three years, except for increases under sections 559 to 560, by more than 20 per cent (capping limit). The percentage in accordance with sentence 1 is 15 per cent if the adequate supply of the population with rented dwellings at appropriate terms in a municipality or a part of a municipality is particularly jeopardised and these areas have been specified in accordance with the sentence 3. The Land Governments are authorised to determine these areas by means of a statutory instrument for a maximum duration of five years in each case.
(4) The capping limit does not apply
1. if a duty of the lessee to make compensation payments under the provisions on the reduction of improper subsidisation in housing has lapsed because the rent-control scheme has ceased to apply, and
2. to the extent that the increase does not exceed the amount of the most recently payable compensation payment.
The lessor may demand, at the earliest four months prior to the rent-control scheme ceasing to apply, that the lessee inform them within one month of the duty to pay compensation and of its amount. Sentence 1 applies accordingly if the duty of the lessee to make a compensation payment under sections 34 to 37 of the Residential Housing Subsidisation Act (Wohnraumförderungsgesetz) and provisions of Land law issued thereunder has lapsed because the rent-control scheme has ceased to apply.
(5) From the annual amount that would result in the case of an increase to the reference rent customary in the locality, third-party funds within the meaning of section 559a are to be deducted, in the case governed by section 559a (1) in the amount of eight per cent of the subsidy.
(6) A deviating agreement to the disadvantage of the lessee is ineffective.