Housing policy: States are pushing for an extension of the rent cap

Several federal states want to extend the rent cap until 2029 through a Federal Council initiative. Those involved include Hamburg, Lower Saxony and Mecklenburg-Western Pomerania. Without the extension, the relevant state regulations would expire on December 31, 2025 at the latest, and even earlier in seven federal states.

“The rent brake does not create new living space, but it is an instrument to protect tenants from explosive rent increases,” said Mecklenburg-Western Pomerania’s State Building Minister Christian Pegel (SPD), explaining the initiative. The housing markets remain tense not only in major cities, but also in university towns such as Rostock and Greifswald or in tourism strongholds on the Baltic Sea.

Lower Saxony’s Construction Minister Olaf Lies also emphasized the importance of the rent cap. “It helps tenants who have to move, because costs can quickly escalate, especially in tense markets,” said the SPD politician.

The Federal Cabinet wants to decide on an extension until 2029

In tight housing markets, the rent cap ensures that the rent when a new rental agreement is concluded can in principle not be more than ten percent above the local comparative rent. The state governments decide whether the brake applies in certain areas.

The rent cap has already been extended once since its introduction in 2015. The federal traffic light coalition had agreed in its coalition agreement to extend the current regulation. In October, the then responsible Federal Justice Minister Marco Buschmann (FDP) presented a draft law that provided for an extension until the end of 2028.

After the traffic light went out, it is unclear whether the Bundestag will still vote on it. The red-green government no longer has a majority in parliament. The Federal Cabinet still wants to decide on an extension until the end of 2029 this Wednesday. However, it does not yet look as if the bill would find a majority if it were actually put to a vote in the Bundestag.

States are planning their own draft laws

The states are therefore aiming for a bill to be submitted to the Federal Council in the short term. This will be voted on at the state chamber meeting on December 20th. “An expiry of the rent control at the end of 2025 would lead to an increase in re-letting rents. Coupled with the high energy and living costs, this would particularly push people with low and increasingly middle incomes out of their traditional neighborhoods,” explained Pegel.