Lease terms for brakes extended, continuing until December 2029
German Government Advances Proposals for Rent Control and Affordable Housing
BERLIN - In a bid to address rising housing costs, the German federal cabinet has initiated a draft to extend the legal rent brake until 2029, safeguarding tenants from excessive rental price hikes. The extension, originally due to expire at the end of this year, is a key promise from the new coalition government.
Justice Minister Stefanie Hubig of the SPD emphasized the urgency, stating that "People need affordable housing." To ensure social justice, she intends to enforce stricter regulations on automatic rent increases and improve transparency regarding ancillary costs.
The rent brake applies in regions designated as having tense housing markets. Upon new apartment leasing, the rent may not exceed the local comparable rent by more than 10% on the first rent day. However, exceptions exist, such as for newly built apartments rented out for the first time after October 2014, and those that are rented out again following comprehensive modernization.
The rental housing market remains tight, particularly in metropolitan areas. High re-let rents present a financial challenge not only to low-income individuals but increasingly to average earners and families with children, leading to displacement from established residential areas.
The German Tenants' Association welcomed the prompt extension of the brake as promised, but expressed concern over remaining exceptions, particularly the outdated 2014 date for exceptions on new buildings. The CDU politician Jan-Marco Luczak, a Union building expert, praised the extension, stating it offers quick security for people. However, Luczak cautioned that the rent brake should not be extended indefinitely as it merely serves as an interim solution until housing markets stabilize.
The Homeowners' Association, Haus & Grund, criticized the extension, stating that it would merely exacerbate challenges in tense housing markets where finding a new apartment is already difficult. The Association further questioned the fairness of the rental brake, arguing that housing benefits might be a more equitable solution.
Minister Hubig emphasized that the extension is a first step towards better tenant protection. Additional measures, such as increased transparency in ancillary costs and stricter rules for contracts with index rents, are planned, as outlined in the coalition agreement. Further scrutiny is also aimed at furnished apartments and practices of bypassing the rent brake.
The enactment of these measures aims to address affordability and speculative practices within the housing market. However, they face opposition from some industry stakeholders. The coalition government's proposals include strengthening pre-emptive rights for municipalities and creating a new investment fund for housing to lower financing costs. Both initiatives aim at promoting the construction of affordable apartments in high-demand areas.
- To provide a more balanced business environment, the German Government aims to intensify regulations in the finance sector, focusing on rental housing, given the urgent need for education-and-self-development and general-news reports on affordability issues.
- In line with their commitment to social justice, the German Government has proposed strengthening business regulations in the renting sector, particularly by creating a new investment fund for housing, with the aim of boosting affordability in education and self-development, as well as general news coverage being filled with stories about expensive housing.
