Critics within the real estate sector fiercely denounce the prolongation of rent control regulations. - The real estate sector voices strong opposition to the prolongation of the rent cap measure
The federal government has prolonged the Rental Price Brake, a rent control measure, until the end of 2029, sparking varied responses from the real estate sector. The extension, approved by the cabinet on Wednesday, will allow federal states to curb rental hikes in densely populated areas. Under the scheme, new rents should not exceed the local average by more than 10%.
The regulation, initially instituted in 2015, currently caps rent increases at 110% of the average in over 400 municipalities, affecting approximately 30% of the population. Justice Minister Stefanie Hubig defending the move emphasized the need for affordable housing and emphasized stricter protections for tenants, such as stricter rules on index-linked rents and furnished flats.
The real estate industry, however, remains apprehensive, citing concerns over investment disincentives. Critics argue that rent controls wane investor interest in housing construction and maintenance, potentially worsening the shortage of affordable homes. They also worry about their ability to recoup costs and maintain profits, given the increasing construction costs.
Industry leaders are closely observing the government's plans to tighten regulations on furnished rental units and indexed contracts, popular among investors for circumventing rent caps. Such changes may impact landlords' financial flexibility and returns, raising concerns about profitability.
In an attempt to strike a balance between tenant affordability and landlord incentives, the government is proposing to raise the threshold for simplified rent increase calculations related to modernization. By the end of 2025, the threshold will rise from €10,000 to €20,000, allowing landlords to invest in property upgrades without immediate rent restrictions. However, details remain uncertain.
Though seen as necessary, the extension is only viewed as a starting point by housing advocates, including tenant associations like the Berliner Mieterverein. They call for stronger regulations and protections, particularly in regions where rental increases are a significant issue, such as Berlin. This ongoing dialogue suggests that further regulatory adjustments could be made to address affordable housing and sustainable investments.
The government's community policy, including the Rental Price Brake extension, emphasizes the need for affordable housing and stricter tenant protections, thus raising concerns about potential finance and business implications for investors involved in vocational training, such as property maintenance or housing construction. Housing advocates, like the Berliner Mieterverein, are pushing for stronger regulations to address the issues of affordability and sustainable investments, potentially leading to changes in vocational training programs and business strategies.
