Government coalition agrees – the rent brake will be extended

26. Jul

After a long refusal by the FDP, the coalition government agreed in April to extend the rent brake. However, this cannot solve the existing problems on its own.

On April 10 of this year, the coalition parties were able to agree on an extension of the rent brake. It was about time, as the current brake expires at the end of 2025. In addition, the federal states need around one and a half years to prepare for the implementation of a new regulation.

Rent brake to protect affordable housing

There has been a glaring imbalance between supply and demand for affordable housing for years, especially in urban areas. Legislators first attempted to alleviate the tense market situation back in 2015 with the introduction of the rent brake.

The provisions of the German Civil Code (BGB) known as the rent brake are intended to protect tenants from rapid rent increases in metropolitan areas. The aim is to ensure that prospective tenants with lower incomes still have the opportunity to find housing in cities.

Specifically, the law stipulates that the respective rent for new rentals may only exceed the local rent for comparable properties by 10 percent. This is intended to prevent large rent increases. On the other hand, there are also some exceptions in which the regulation does not apply. For example, in the case of furnished or short-term rentals.

Rental problem is expanding

Even if the extension of the rent brake is to be welcomed, it is by no means enough to solve the rent problem. This is also shown by the current figures.

Rents in major German cities rose by an average of 12 percent in 2023 alone. In popular cities such as Berlin and Munich, the problems are even more drastic. For example, rents for new rentals and re-letting in Berlin rose by a full 27 percent.

In Munich, the rent index rose by 21 percent. The rent brake, which only applies if the rent index is exceeded, therefore does not help with these increases.

Many planned measures not yet implemented

In view of these figures, it seems all the less understandable that many of the measures agreed in the coalition agreement have not yet been implemented or tackled.

For example, the coalition agreed to reduce possible rent increases from 15 to 11 percent, improve protection against dismissal and reform the non-profit housing sector. None of these projects have yet been implemented.

Summary

The extension of the rent cap until 2029 will at least slow down the ongoing deterioration of the rental market.

However, much more is needed for a real turnaround. Action is needed now to preserve social diversity in cities.