Average rent has risen by more than 10 percent since 2008 across Germany – and by much more than that in some urban areas. The capping procedure was included in the coalition agreement last year between the conservative Christian Democratic Union and Social Democrats.
Around 4.2 million properties will likely be affected, but there will be no break for the first tenant of a newly built or if a residence has been extensively modernised, according to the draft law.
The idea that a new renter automatically has to pay a letting agent will also largely be scrapped, said Justice Minister Heiko Maas. If an agent breaks these new laws they could face a fine.
Landlords will also no longer be allowed to load letting agent costs onto the tenant in rent. And a contract with a letting agent will only become valid if a flat hunter gives the agent a written contract, and the agent has specifically found a property for the client.
The aim is to take the strain off renters, who will also be able to request information from their landlords about how their rent is calculated.
The ministry estimated that in total, the measures would save renters €854 million a year.