Germany: A rent reduction is possible during the lockdown; the amount depends on the individual case.
When many shops were forced to close due to government orders in autumn 2020 and spring 2021, some tenants of commercial properties did not pay their rent in full. The Federal Supreme Court (BGH) has now ruled that the tenants were generally entitled to a rent reduction in this case. The amount by which the rent can be reduced depends on the circumstances of each individual case.
The tenants concerned are entitled to a rent reduction due to a ” interference with the basis of the contract” (§ 313 BGB; in many countries referred to as force majeur).
The BGH considers that the interests between tenant and landlord are not to be divided 50/50 in a general way. Rather, it must be examined to what extent the tenant can be expected to continue paying the rent in the individual case. In particular, the following factors must be taken into account:
- Duration and extent of the disadvantages for the tenant
- Compensatory measures which the tenant has taken or could have taken (e.g. online business)
- Receipt of state compensation payments (except for pure loans)
- Benefits of a business insurance policy
The previous instance (OLG Dresden) had still assumed a flat-rate rent reduction of 50%. This argumentation is now no longer possible after the current decision of the BGH.
Tenants and landlords are recommended to find amicable solutions based on the guidelines of the BGH.
Source: BGH, decision of 12.01.2022