Is a rent reduction due to the balcony justified?

I think someone was looking for a reason. Even several! Canceling deadlines for completion and then demanding a rent reduction because it was not finished - I find that very cheeky. Or was it about the period when there was no railing yet?

So, after a tenant reports a defect to the landlord, the landlord is obliged to remedy the defect. You have demonstrably done this with several appointments. On the tenant’s side, there is a duty to cooperate. A rent reduction must be declared by the tenant in writing and with a date from which it is to apply. Retroactive rent reductions are very difficult.

But here is another approach: is the balcony mentioned in the rental contract? Is a living area stated and is the balcony partly included there?
If not (which would be good) the principle of "rented as seen" also applies. You may have promised the tenant a balcony later (hopefully without an exact date), but it is not part of the rental agreement and therefore no rent reduction would be possible.

P.S. A non-usable balcony allows a rent reduction of the net cold rent by about 5%. If you want to get rid of the tenant, it can help to simply let an exaggerated rent reduction run without comment. Once two months’ rent arrears are reached, as a landlord you have the right to terminate without notice.

So especially if you can prove that they canceled the appointments, then you should be able to remain very calm. Because, without this being a legal statement, in my opinion there should be no justification for a rent reduction.

Regarding termination due to personal use, simply moving in yourself is not enough. There must actually be a genuine need, which, especially if the other party opposes it, is not a simple and is a lengthy matter.

I would probably first object to the rent reduction by referring to my own contribution, and if necessary consider legal advice. A lawyer can tell you what you and the tenant are allowed to do under the given conditions and what you are not allowed to do.