Extended Rent Cap: Protecting Tenants Until 2029
Rental brake enacted to halt price increases on brakes, lasting until 2029. - Rent ceiling to prevent price escalation prolonged till 2029.
Here's the lowdown on the latest evolution in German housing regulations. The rent cap, a protective measure for city-dwellers in tight housing markets, has been prolonged all the way to the end of 2029. The decision was unanimously approved in the German Bundestag by the CDU/CSU, SPD, and Greens. The AfD voted against it, while The Left chose to abstain.
What's the Big Deal?
The rent cap is applicable in designated areas by the respective state government, where rental prices can't exceed local comparative rents by more than 10%. These comparative rents are obtained from rent indices, which provide the average rental price for similar apartments.
Newly built apartments constructed after October 2014 and apartments comprehensively modernized after renting are exempt from this cap.
Let's Talk Politics
The House and Grund property owners' association criticizes the cap as unnecessary. According to Kai Warnecke, President of the German Press Agency, high ancillary costs for utilities are the real issue, not sky-high rents. He deems the rent cap counterproductive, as it discourages landlords from investing in energy-efficient upgrades.
The SPD would have liked more from the regulation, while the CDU acknowledges its benefits. The AfD considers the rent cap ineffective, pointing out that it hasn't led to an increase in apartment availability.
In contrast, the German Tenants' Association (DMB) supports the extension and calls for stronger measures. Lukas Siebenkotten, DMB President, demands stricter fines for landlords violating the rent cap and increased transparency in furnished apartment rentals.
Tenant complaints:
- Landlords passing on excessive rent charges to successors
- A lack of clarity in furnished apartment agreements, making it difficult for tenants to check for violations of the rent cap
- Landlords performing speculative modernization to evade rent controls
Key Takeaways:
- Rent cap extended to the end of 2029
- Narrowed exemptions for modernized properties
- Calls for stronger tenant protections and broader rent caps in light of escalating rents in cities
- Existing tenants benefit from capped rent increase and modernization cost limitations
- The impact of this prolonged regulatory environment on real estate investment strategies remains to be seen.
- Despite the opposition from some parties, the extended rent cap in EC countries, such as Germany, will protect tenants until 2029, following unanimous approval in the German Bundestag.
- The rent cap, applied in designated areas, limits rental price increases to 10% above local comparative rents, obtained from rent indices for similar apartments.
- Critics, like the House and Grund property owners' association, argue that high ancillary costs for utilities are the real issue, not sky-high rents, and the rent cap discourages landlords from investing in energy-efficient upgrades.
- The German Tenants' Association, on the other hand, supports the extension of the rent cap and calls for stricter fines for landlords violating the cap, increased transparency in furnished apartment rentals, and broader rent caps in response to escalating rents in cities.
