Dismissal due to energy costs – now the “healing effect” should become law

In Germany, there is a growing concern that many apartment tenants could collapse financially under the burden of high guest and electricity bills and lose their apartments. In an open letter to Federal Minister of Justice Marco Buschmann (FDP), tenant and social associations, unions, lawyers and judges are now calling for an improvement in protection against dismissal: Tenants should generally be given the opportunity to settle arrears in payment afterwards and thus avert an action for eviction.

"There are already signs of high jumps in hot water and heating costs, which will also severely affect the ability of these people (ed.: tenants) to pay in a few months," says the letter, which is available to WELT. If payments are not made in whole or in part, "the landlord regularly gives notice of termination without notice and, alternatively, a notice of termination in good time".

However, tenants would only have the opportunity to settle the rent arrears within two months of the service of an eviction notice and to make a termination by the landlord ineffective if they terminated without notice. "Make it clear by law that the 'healing effect' of paying all rent arrears also extends to ordinary termination," the associations appeal to Minister Buschmann and refer to corresponding announcements in the traffic light coalition agreement.

If tenants are still able to pay their energy costs with the help of relatives, friends or authorities, the interests of the landlords are also protected, the letter says. However, the authors also suspect other motives behind some termination plans: "Particularly in tense housing markets, landlords often use every opportunity to terminate the lease because of higher re-letting rents," the letter says. "This puts people who are in financial difficulties under the enormous pressure of the threat of homelessness."

The letter was signed by a broad alliance of local tenants' associations, the German Tenants' Association, the German Federation of Trade Unions, church associations, the Paritätischer Gesamtverband, but also by some lawyers, such as the Republican Lawyers' Association RAV and the New Judges' Association.

"One-off payments that are socially graded are important for us," says Katja Mast with regard to possible relief. In the WELT talks, the parliamentary manager of the SPD parliamentary group called for a gas price cap, "so that a basic requirement can be calculated for the citizens".

Source: WORLD / Lutz Stordel

Tenants of Germany's largest housing group, Vonovia, are also likely to be concerned about eviction lawsuits. On Tuesday, the Reuters news agency quoted from a letter to investors in the listed group: "Last resort: sending out the eviction notice," it said. In the event of a delay in payment, Vonovia proceeds according to a staged model. If the amount owed by the tenant corresponds to two months' rent, the contract could be terminated.

In an interview with WELT, Vonovia CEO Rolf Buch clarified the statements. The letter refers to the general procedure for rent losses. "With us, nobody will lose an apartment just because the heating costs cannot be paid," said Buch.

“We deal intensively with individual cases in which tenants have gotten into difficulties because of high energy prices. If necessary, installment payment agreements can be made, and we also support you in communicating with local authorities and in the search for government support services. We have our own hardship case management. We will not give notice of termination due to high energy costs.”

However, Buch emphasized that tenants had to report in good time so that the Vonovia managers on site would know in good time. There are also “cases in which individual tenants do not pay their rent for various reasons, even though they could actually do it. For such cases, landlords also need sanction options, as provided for in the law.”

The increased gas prices have not yet been reflected in Vonovia's rent including heating, "because we are secured up to and including the first quarter of 2023 and gas has already been purchased. That may change over the next year," said Buch.

He therefore thinks it is right for the state to intervene in the market. This also includes increasing the housing allowance, "although it is still questionable how well this measure will work if the number of recipient households increases to two million," the Vonovia boss pointed out. Many authorities in the municipalities are working at the limit of their capacity.

Basically, however, the problem of high energy costs at the beginning of the economic chain should be solved, "not with flat-rate payments for heating costs, but with targeted support and with a price limit for the raw material gas, whether in the form of a cap or a brake," said Buch . "It's expensive, but still better than jeopardizing the economic basis of business and private households."

According to earlier information from the group, around 55 percent of the heating systems in Vonovia's portfolio are supplied with gas. Vonovia had announced that it would reduce heating at night to save gas. The Bochum group owns around 490,000 apartments in Germany.

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