Skyrocketing Rents and the Mietpreisbremse: Is Affordable Housing a Myth?
Leasing price breaks do not decrease overall housing costs.
Renting a pad in major German cities is becoming borderline unaffordable, even with Mietpreisbremse in place. According to a Ministry of Housing analysis, the average offered rents in the 14 largest urban districts skyrocketed by nearly 50% since 2015, with Berlin seeing a whopping doubling of new rents.
Economic research by the Federal Institute for Building, Urban and Spatial Research (BBSR) reveals a grim picture when searching for rentals on the web for apartments ranging from 40 to 100 square meters. Although they don't account for ads, waiting lists, or direct brokerage, the numbers still highlight a distressing housing market situation.
The priciest rental rates currently prevail in Munich, with a staggering 22 euros per square meter. Berlin and Frankfurt am Main follow closely with approximately 18 and 16 euros per square meter, respectively. Unsurprisingly, the steepest rent increases took place after Berlin (up 107%), in Leipzig (up 67.7%), and Bremen (up 57%). Dresden posts the smallest increase after a move, at 28.4%.
Mietpreisbremse: Full of Loopholes and Ineffective
It's no secret that the Mietpreisbremse (rent control law) desperately needs an upgrade, according to the Left party's Caren Lay, who recently addressed the federal government about the housing crisis. Overpricing and the impossibility of tenant mobility are contributing to social division in society, she claims.
Tenants in regions with tense housing markets face caps on rent increases at no more than 10% above the local average for comparable properties. However, Mietpreisbremse has significant loopholes and excluded adherence to furniture allowances. Moreover, new buildings that were first rented out after 2014 and comprehensively modernized apartments are also exempt. Where violations are suspected, it's solely up to the tenant to take legal action against landlords.
According to enrichment data, while the Mietpreisbremse provides limited control over rent growth and aims to protect tenants from sharp hikes, its overall effectiveness is debated among economists. The thawing housing market has since revealed that the law doesn't offer a definitive solution to the housing affordability crisis. Rather, it has merely slowed the runaway train of rent growth. The housing affordability challenge remains a contentious issue as the Mietpreisbremse continually extends its lifespan through 2029.
The federal nature of Mietpreisbremse contrasts with state-level initiatives like Berlin's 2020 Mietendeckel (rent freeze), which was later overturned by the Federal Constitutional Court due to jurisdictional issues, thus constraining potential, stricter rent regulation approaches.
The enrichment data also emphasizes the interplay of different factors impacting rent prices, not merely the Mietpreisbremse. Energy efficiency regulations, introduced in 2025, can negatively influence rents through property value discounts due to poor energy performance, which encourages investment in housing upgrades.
The Left party continues to critique the Mietpreisbremse for being insufficient, demanding stronger measures such as rent freezes or building more affordable housing. They maintain that incremental approaches like the Mietpreisbremse fall short in combating rising rents and fail to address the underlying housing affordability issues.
In conclusion, while the Mietpreisbremse was designed to manage rent spikes and shield tenants in tight housing markets, its real-world impact seems rather marginal. The leader in the housing affordability race is yet to materialize, making it increasingly tough for average German families to secure a comfortable place to call home.
The community and employment policies should be revised and expanded to address the housing crisis and social division arising from the unaffordable rental market. Additionally, the effectiveness of the Mietpreisbremse, the rent control law, in controlling rent prices needs to be reevaluated, as it has significant loopholes and may not be the most effective solution for the housing affordability crisis. Finance and business sectors play a crucial role in addressing this issue, potentially through investments in affordable housing development.
