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Germany proposes stricter rent controls amid housing crisis

The Local Germany
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Germany proposes stricter rent controls amid housing crisis
View of new-build apartments in the Schöneberg district in Berlin. Photo: picture alliance/dpa | Monika Skolimowska

With a tense situation in the German housing market, the Social Democrats (SPD) have proposed plans to bring in tougher restrictions on rent increases.

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As part of their efforts to enhance tenant protection, the SPD is set to adopt a comprehensive set of measures during a parliamentary group retreat on Monday.

The move comes as skyrocketing rents have caused hardship for tenants, prompting the SPD to call for a "rent freeze" over the next three years, according to statements from deputy parliamentary group leader Verena Hubertz.

"Tenants need a reprieve," Hubertz stated in an interview with Bild am Sonntag. According to Hubertz, the SPD sees a need for action in light of the enormous rent increases and the significantly rising ancillary and heating costs triggered by the war in Ukraine.

Under the SPD's proposed plans, landlords would still be allowed to raise rents but, in areas with a tight housing market, rent increases would be limited to a maximum of six percent over a three-year period. This cap would apply only until the local comparative rent is reached.

READ ALSO: 'No end in sight': Why is it so hard to find housing in Germany right now?

Currently, Germany enforces a general cap on rent increases, allowing landlords to raise rents by up to 20 percent over three years. In regions with a particularly competitive housing market, this cap is lowered to 15 percent.

The coalition agreement among the traffic light parties (SPD, Greens, and FDP) originally aimed to reduce this cap to eleven percent. However, the SPD parliamentary group sees this reduction as insufficient given the current dire state of the housing market.

The paper also calls for a solution regarding indexed rent contracts. These rents linked to the inflation rate have become problematic because prices – and therefore rents – have risen sharply due to the conflict in Ukraine.

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"The previous regulation has often led to annual rent hikes exceeding ten percent," argues the SPD. They now propose linking indexed rents not to inflation rates but to the overall development of net cold rents. At the very least, an "effective cap" should be introduced for such contracts.

READ ALSO: REVEALED: How the cost of renting in Germany compares to home ownership

The paper also aims to tighten enforcement of rental profiteering (Mietwucher). According to the SPD parliamentary group's plans, if the rent exceeds the local average by at least 20 percent and housing supply in the area is limited, the landlord will no longer need to prove intent to exploit to be accused of profiteering.

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