Lawmakers in the Traffic Light Coalition in Germany have decided to extend a law to cut rental prices until 2029, representatives said on Wednesday. Initially, the temporary rent control law was supposed to expire next year, but given the country’s housing shortage, lawmakers decided to extend it for another 5 years.
Under the rent control law, known as the “Mietpreisbremse”, landlords are prohibited from setting rents at levels considered “unreasonable” in the eyes of the law. Thus, residents in regions with tight housing markets such as Berlin, North Rhine-Westphalia, Hamburg and others can continue to use this mechanism when renting apartments after 2025.
This decision reflects the serious challenges facing Germany in the field of housing policy and underscores the need to continue efforts to provide affordable housing for citizens. The Traffic Light Coalition’s policies are aimed at easing pressure on housing and ensuring stability in the housing market.
Extending the law also gives tenants additional time to plan and adapt to the rental market. This will allow them to continue to enjoy protection from rising rents and provide greater confidence in the stability and predictability of their housing costs in the future.
However, some experts have expressed concerns about the long-term consequences of such policies, believing that they could limit investment in the real estate sector and slow down market development. It is therefore important to find a balance between protecting the interests of tenants and stimulating investment in housing construction.
Overall, the extension of the law to reduce rental prices in Germany until 2029 underlines the government’s serious commitment to providing affordable housing and protecting the interests of tenants, given the difficulties in the country’s housing market.
What is a rent brake?
The “rent brake”, or Mietpreisbremse in German, is a legislative measure introduced in Germany in 2015 aimed at controlling rent levels in high-density areas. This law sets the maximum amount of rent that a landlord can charge.
According to the Mietpreisbremse, cold rent (excluding utilities) cannot exceed 10% of the average rent for similar housing in the same area, as determined by the regional rent index known as the Mietspiegel.
If the landlord sets the rent above the specified limit, the tenant has the right to a rent reduction in accordance with the law.
Legal advice providers such as Conny provide assistance to tenants in obtaining rent reductions when the landlord exceeds legal limits.
Conny CEO Dr Daniel Halmer emphasizes that the rent brake is a powerful tool that helps lower rental costs and buys time until more affordable housing becomes available.
Does rent capping help save tenants money?
The introduction of the rent brake in Germany in 2015 was welcomed by tenants as an important step to protect their interests amid a severe shortage of affordable housing. However, three years after the introduction of this measure, there was an increase in rents, especially in the center of Berlin, which raised criticism and questions about the effectiveness of the law.
The German Tenants’ Association is pushing for tighter rent restrictions, expressing dissatisfaction with current exceptions and loopholes in the rent control system.
Extending the rent control law until 2029 would maintain the status quo for five years, leaving renters protected by the law the opportunity to continue to benefit from those protections. However, for properties not subject to the law, rent will remain unlimited.
Some associations, such as Haus und Grund, expressed dissatisfaction with the extension of the law, fearing that a strict rent cap could limit investment in property modernization.
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