They should also be able to defend themselves more easily against exorbitant rents – as Germany’s controversial Mietpreisbremse (rental control law) is to be improved accordingly. The law, enacted in the summer of 2015, set a cap for how high landlords in urban areas in Germany could charge above the so-called Mietspiegel, or rental average.
The coalition factions Christian and Social Democrats (CDU/CSU) and Social Democrats (SPD) agreed on a compromise on tenancy law, which the Bundestag wants to put into law on Thursday. Rents, especially in large urban areas in Germany such as Berlin, Hamburg and Munich, have risen massively in recent years.
The rules, according to which landlords may allocate a part of the costs to tenants after modernizations, are to be tightened. Nationwide landlords may reclaim annually only eight instead of 11 percent of the costs from their tenants that they can now, to cover the costs of repairs or refurbishings to a flat.
The trend of “modernizing out” has been regarded as a major problem in the housing market – for example, when an apartment is luxuriously renovated and tenants can no longer fork down the higher rent.
“The situation, especially in large urban areas, is serious,” said Minister of Justice Katarina Barley (SPD). Young families and single parents in particular have great problems finding affordable housing in so-called conurbations, or vast urban regions comprised of a number of cities and large town, she added.
The planned capping limit of three euros permitted rent increase per square meter of living space within six years after modernizations remains – but the law will be tightened: Where the rent amounts to less than seven euros per square meter, landlords may only add on an additional two euros per square meter within six years.
Reforming the rent index
The current law states that the rental price can only be set at ten percent higher than the so-called Mietspiegel in certain cases – for new buildings, renovations or if the previous rent was already higher one year before the end of the tenancy.
Yet under the new regulations, set to go into effect on January 1st, 2019, tenants should now be able to see more easily why they pay more than previous tenants. If a landlord demands more, he will have to inform the tenant of this before the contract is concluded and state a reason – this was not the case until now.
If the tenant thinks that his landlord is asking too much, it should be easier in future to object, said a speaker of Barley.
The renter is now allowed to rebuke the landlord if the raise in rent is not reasonably justified. The landlord in turn will be obligated to state a reason before making an increase. If the renter still is not sure if the increase is justified, he or she can seek the council of the local Mieterverein, a renter's association which offers legal advice for minimal fees.
The previous Grand Coalition introduced the Mietpreisbreme or rent price brake. It applies in regions with a tense and overcrowded housing market, which are determined by the federal states. Yet the law quickly proved to be ineffective – partly because tenants usually did not know how much their predecessors had paid.
“It has always been important to the union that people are not driven out of their traditional residential areas because they can no longer afford their rent,” said SPD Union tenancy law expert Jan-Marco Luczak.
However not everyone was satisfied with the the new legislation changes. Free Democratic (FDP) member of parliament Katharina Willkomm said that the rent brake was fundamentally unsuitable for tackling the causes of the rent increase and that new residential construction was necessary.
Axel Gedaschko, President of the German Housing Industry Association, felt it would restrict rentals from receiving the refurbishings they needed. “An additional restriction for modernization – and this again especially for landlords with low rents – is completely counterproductive and jeopardizes the future viability of housing in Germany.”