A landlord in Munich has been fined thousands by local tax authorities after charging his tenants rent that was deemed to be "too low".

Munich landlord fined for charging below average rents

A man who owns properties located in the central district of Sendling in Munich has been fined by the city for charging his tenants “too little” rent.

According to the 2022 rental index for the German city, the average monthly rent is 20,93 euros per square metre. Thaddäus Spegel, the landlord in question, has been charging a maximum of 13,50 euros per square metre - a sum that city authorities decided was too low. They have demanded that Spegel pay 41.445 euros in tax to the Finanzamt (tax office).

Speaking to German broadcaster ZDF, Spegel said, “I feel I have absolutely been treated unfairly.” He added that he felt as though he has been punished by local authorities for being a “fair landlord”.

German law requires landlords to charge their tenants a minimum of 66 percent of the average local rents. The outcome of the Munich Finanzamt’s case against Spegel will depend on whether he made income-related tax deductions on his properties. 

Germany’s current rent controls are failing tenants

In a high-demand city like Munich, one of the most expensive in Germany, landlords often demand rents that are disproportionately large in comparison to wages in the city, meaning housing becomes increasingly unaffordable for many people working.

With more and more people moving from German cities to suburbs, rents on urban outskirts are also increasing. In 2021 the municipality of Karlsfeld, situated just 12 kilometres from the centre of Munich, was found to be the most expensive suburb in Germany. Three other Munich suburbs - Germering, Dachau and Erding - also featured in the top 10 most expensive areas, reflecting the on-going pressure on Munich’s housing market.

Cities like Berlin have tried regulating the rental market to keep housing affordable. The German capital introduced a rent cap (Mietendeckel) in 2020 that was later deemed unconstitutional by the federal court in Baden-Württemberg. After the year-long rent cap was removed, tenants in Berlin were required to pay back hundreds of euros of their rental savings to their letting agent (Hausverwaltung).

According to a study done this year, landlords in Germany are increasingly circumventing rent control laws by offering contracts for short, fixed-term furnished apartments. Offering such rental contracts mean that landlords can regularly raise rents between lets while undermining tenants’ bargaining power due to the insecure, short-term nature of their contracts.