Prolonged Rental Brake to Prevent Rent Increases in Germany
Rental brake system adjustments to persist through 2029. - Leasing agreements for brake systems will remain active until the end of 2029
The German federal cabinet has proposed an extension of the rental brake, a measure designed to protect tenants from excessive rent hikes, until the end of 2029. The currently imposed rental brake, implemented in 2015, was slated to expire by the end of this year.
Justice Minister Stefanie Hubig, from the Social Democratic Party (SPD), emphasized the urgency of the situation, while also alluding to stricter regulations for automatic rent increases and enhanced transparency in additional costs. Hubig voiced concerns over the growing need for affordable housing, especially as many urban centers continue to face housing market tense.
The rental brake applies in regions designated as having a strained housing market by respective state governments. Upon the rental of a new apartment, the rent may not exceed the local comparative rent by more than ten percent at the onset of the tenancy, which is based on an average rent for similar apartments available in the vicinity. Exclusions to the brake include newly constructed apartments first rented out after October 2014, among others.
Tenants' Association President Lukas Siebenkotten welcomed the extension of the brake, but expressed disappointment that significant exceptions were not concurrently eliminated. He specifically pointed out the need to update the 2014 date as apartments built over ten years ago are no longer considered new constructions, thus unjustifiably remaining excluded from the rental brake. The Bundestag is expected to weigh in on potential improvements.
Homeowners' Association President Kai Warnecke criticized the extension, arguing that it does not resolve the primary issue - finding a new apartment amidst the tense housing markets. Warnecke also suggested housing benefits as a fairer alternative to the rental brake.
As a next step, the government will focus on enhancing tenant protection, addressing automatic rent increases, regulating furnished apartments, and eradicating practices that circumvent the brake. The coalition agreement includes further measures aimed at increasing transparency in ancillary costs and tightening rules regarding index-linked rents.
In select regions, such as North Rhine-Westphalia and Lower Saxony, the implementation of the rental brake has been expanded recently. Union construction expert Jan-Marco Luczak lauded the extension, stating it provides swift relief for citizens. However, Luczak stressed that the rental brake remains a temporary solution until the housing markets stabilize and cannot be extended indefinitely.
- The extension of the rental brake until the end of 2029, as proposed by the German federal cabinet, might potentially include revision of policy-and-legislation regarding vocational training for those in the construction and real estate sector, to ensure a steady supply of skilled workers in the business, alleviating the pressure on the tense housing market.
- In light of the persistent need for affordable housing and the growing tension in urban centers, the government could consider extending finance for vocational training programs, specifically focusing on sectors like construction and infrastructure, to stimulate job creation and fill the gap in the availability of housing units.
- As the government works towards enhancing tenant protection and considering policies like automatic rent increases and ancillary costs, it would be prudent to engage with relevant stakeholders, including the general-news media, to create awareness around the issue and encourage constructive dialogues in politics, ultimately contributing towards formulating fair community policies that address the housing crisis effectively.
