BERLIN (dpa-AFX) — The rent cap for new leases in high-demand residential areas will be extended until the end of 2029. A corresponding bill from the black-red coalition secured the necessary majority in the Bundesrat.
Cap with Exceptions
The rent cap applies in regions designated by the respective state government as areas with a tight housing market. For new leases, the rent at the start of the contract may not exceed the local comparable rent by more than ten percent. This refers to the average rent for similar apartments, as found, for instance, in local rent indexes.
Exceptions to the cap include newly constructed apartments first rented after October 2014 and apartments rented for the first time following comprehensive modernization.
However, Federal Justice Minister Stefanie Hubig (SPD) believes that simply extending the rent cap, as passed by the Bundestag, is not enough to protect tenants from excessive demands. "After the summer break, an expert commission will begin its work to address further pressing issues in tenancy law," Hubig told the German Press Agency.
Among other things, this commission is expected to propose a fine system for violations of the rent cap. Such a measure is also stipulated in the coalition agreement between the CDU, CSU, and SPD.
Tenants Can Reclaim Excessive Rent
Currently, if a landlord violates the rent cap, the tenant can reclaim the excessive rent paid. "That is all the landlord has to fear," criticizes Hubig. "In my view, that is unsatisfactory."
Fear Prevents Objection
The SPD politician emphasizes that "there are many decent landlords in Germany." At the same time, she notes that many people with low or middle incomes are afraid to object when offered a flat under unfair conditions. "Those who fear losing their roof over their heads are unlikely to object." Therefore, she argues, lawmakers must act.
Proposals Expected by End of 2026
The commission on tenancy law issues is expected to present its proposals no later than December 31, 2026. The panel will include experts from the judiciary and academia, as well as representatives from tenants' and landlords' associations and the German Association of Cities.
The commission is also tasked with considering how the currently relatively toothless regulation on rent usury in economic criminal law could be reformed. It should examine how to "give the rent usury regulation more teeth," Hubig said.
Currently, the law states: "Anyone who intentionally or negligently demands, is promised, or accepts unreasonably high payments for the rental of residential space or related services acts in violation of regulations." A rent is considered unreasonably high if it exceeds the local comparable rent by more than 20 percent.
NRW Housing Minister Sees Other Priorities
North Rhine-Westphalia's Minister for Housing, Ina Scharrenbach (CDU), emphasizes that the expert group is not solely tasked with tightening tenancy law. Rather, the overall aim is to harmonize rental regulations.
"Because in many areas we no longer have tenancy law but rather tenant protection law, fewer and fewer citizens are choosing to rent out property," warns the NRW minister. To make renting more attractive again, she suggests, for example, offering tax incentives to those who rent out at affordable rates.
Need for Action on Short-Term Leases?
Justice Minister Hubig has already announced that, following the four-year extension of the rent cap, she also intends to revise the rules for index-linked leases, short-term leases, and furnished rentals. "Index-linked rents can quickly overwhelm tenants if consumer prices rise sharply," Hubig says. Short-term leases and the letting of furnished apartments can be used to circumvent the rent cap. She intends to put a stop to this.
Victims of Domestic Violence Should Be Able to Exit Leases
Another initiative concerning landlords is also on Hubig's agenda. The SPD politician wants to help women affected by domestic violence to more easily move out of apartments jointly rented with their abusers. So far, it is often difficult in such cases to dissolve the lease without the cooperation of the violent partner.
