Criticism intensifies within real estate sector over prolonged rent reduction policy - Critics in the real estate sector voice strong disapproval towards the expansion of the rent price cap
The German real estate sector has expressed a mix of support and concern following the federal cabinet's decision to extend the "rental price brake" until the end of 2029. The aim of this measure is to cap rent increases in tight housing markets when leasing new apartments, with costs not surpassing local average rent by more than 10%.
Tenant protection is at the forefront for proponents, which include tenant organizations and some political leaders. They argue that the extension is essential to prevent housing from becoming inaccessible for many citizens. Justice Minister Stefanie Hubig noted, "Housing must not become a luxury good," reinforcing the measure as a step toward enhancing tenant protection.
Tenant groups, like the Berliner Mieterverein, view the extension as crucial but inadequate. They advocate for more stringent housing regulations, particularly in major cities, and pushing for closures of loopholes that exempt new constructions built after 2014.
On the other side, critics within the real estate sector argue that rent controls dissuade investment in new housing. They maintain that such regulations lower the appeal for property owners to invest in maintenance, modernization, and construction, potentially leading to long-term housing shortages. Some industry representatives have called for increased government support for housing construction.
In response to criticism, the government is tightening regulations around index-linked rents, furnished rentals, and short-term lettings to close loopholes. The government also plans to raise the threshold for minor modernizations from €10,000 to €20,000 by the end of 2025, making it easier for landlords to pass on some costs to tenants. Potential tax relief for landlords renting at affordable prices is also under consideration.
Stakeholders' views on the rental price brake extension are as follows: Tenant associations acknowledge its necessity but call for stronger regulations and closing loopholes; Market advocates criticize long-term market distortions and call for more construction incentives; the government aims to balance tenant protection with landlord interests through modernization incentives and tax relief. Ultimately, while tenant groups welcome the extension as a necessary protection against rising rents, the real estate industry expresses concern over reduced investment and calls for increased housing construction to address the root causes of shortages.
The community, comprising tenant organizations and political leaders, supports the extension of the rental price brake policy, viewing it as essential for community policy to ensure affordable housing. To finance this extension and encourage more housing construction, the government could consider providing finance options for landlords during the process of modernization and construction, thus addressing the concerns of the real estate sector while upholding tenant protection.
