The traffic light puts another tick in a project from the coalition agreement. The rent cap for sought-after residential areas should continue to apply until 2029. There is a political deal behind this.
Anyone who moves into a popular residential area in the next five years can continue to rely on rent controls. The regulation, which is intended to prevent landlords from overcharging new contracts, is to be extended until 2029. The traffic light coalition had actually agreed on this years ago, but now the extension is probably coming just in time: the old regulation would soon have expired.
The breakthrough is now possible because of a parallel agreement on the long-controversial handling of communications data for investigative purposes. However, other coalition promises to protect tenants are open – and suddenly being put to the test again.
What rent control is
The brake has been in effect since 2015 and limits rent increases for new contracts. In so-called areas with tight housing markets, this may be a maximum of 10 percent above the local comparative rent. The respective state government decides which areas these are. This regulation is now to be extended until 2029 as agreed in the coalition agreement.
However, there are “numerous exceptions and loopholes” to the brake, as the German Tenants’ Association criticized. So far, the regulation does not apply to an apartment that was only used and rented out for the first time after October 2014. According to the Ministry of Justice, the traffic light remains on this date, which means that over time more and more new buildings will fall under the exemption.
The first rental after comprehensive modernization is also excluded. If the previous tenant had to pay more than allowed according to the brake, the landlord can demand the same amount from the new tenant. The brake generally applies to furnished apartments, but landlords can charge a surcharge.
The Ministry of Construction explained that the extension was high time. According to this, the rent brake would otherwise have expired in Berlin at the end of May 2025, in North Rhine-Westphalia and in Hamburg at the end of June 2025. The states would need up to one and a half years to extend it because they would have to use scientific reports to justify which areas have a tense housing market reign.
What the brake brings
A study presented at the beginning of 2019 by the German Institute for Economic Research (DIW) on behalf of the Federal Ministry of Justice confirms that the rent cap has a measurable, albeit moderate, effect. Where it applies, rents rose less sharply. However, the effect is only two to four percent, said study author Claus Michelsen. In numbers this means: Anyone who pays 500 euros in rent today would have to shell out 510 to 520 euros a month without a rent cap. Savings: 120 to 240 euros per year. However, not all landlords adhered to this at the time and tenants did not necessarily sue.
Despite rent controls, pressure on the rental market is increasing, especially in major cities. In the first half of 2023, asking rents in Berlin, Hamburg, Munich, Cologne, Frankfurt, Düsseldorf, Stuttgart and Leipzig rose by an average of 6.7 percent, as an analysis by real estate specialist Jones Lang LaSalle (JLL) shows. “The situation on the housing market has worsened significantly in the last two years,” says the German Tenants’ Association. The new cost traps are furnished living and index rents, which depend on the inflation rate. Experts expect rents to continue to rise.
What the coalition actually wants to do for tenants
The traffic light coalition had planned a whole series of measures to protect tenants in 2021 – but not much has been implemented so far. For example, there is a regulation open for tenants who have been living in an apartment for a long time. This cap for rent increases in particularly popular residential areas should be lowered. According to the coalition agreement, landlords should no longer be allowed to increase the rent in these areas by 15 percent within three years, but only by 11 percent.
Actually also already agreed, but not yet tackled by the traffic light, are changes to the rent indexes, which are used to determine the usual local comparative rent. Rental agreements from the last seven years should be taken into account here. This is likely to often lead to lower comparative rents being reported – and to landlords then being allowed to increase their rents less.
Also open is the introduction of a new housing non-profit organization, which will give tax advantages to housing companies that provide affordable housing for people with little money.
What’s wrong?
Justice Minister Marco Buschmann (FDP) is responsible for changes to tenancy law. The SPD and the Greens criticize that he is not tackling the agreed reforms quickly enough. Both coalition partners insisted on Wednesday that not only the extension of the rent cap, but also all other coalition promises would be fulfilled. The parliamentary managing director of the SPD parliamentary group, Katja Mast, emphasized: “I assume that the FDP is loyal to its contract, and it signed the coalition agreement with us.”
However, the FDP does not believe that changes to tenancy law are the right means. “With the current construction and interest costs, discussions about further tightening of rental law are toxic for investments,” explained parliamentary group vice-president Carina Konrad. “We want to trigger investments in order to build more – that is the best protection for tenants in the long term.” State intervention in the housing market does not lead to more apartments and is actually counterproductive.
How much the coalition agreement is still worth
The FDP is thus questioning reform plans that the coalition had long ago agreed on. Buschmann sees “there is still a need for discussion” on these issues, according to the Ministry of Justice. A spokeswoman for the SPD-led building ministry then made it clear: “We don’t actually see a need for discussion. What was set out in the coalition agreement still applies to us.”
It is not the first time that projects from the coalition agreement are subsequently called into question in the traffic light coalition. Normally, however, the partners tend to argue about how exactly to fill in a fairly general formulation from the coalition agreement with content. Things are different when it comes to extending the rent cap and lowering the cap limit: the details are already set out in the coalition agreement, but basically only a few numbers would have to be changed in the legal text. Given the reservations in the FDP, it remains to be seen whether the cap will be reformed.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
