Nery Alaev

What’s being done to mitigate soaring rents in Germany? : Nery Alaev

Rent prices

Soaring housing costs in Germany are not only Concerning residents who are almost becoming priced out of the rental market, but so the Government . Rising rent has long been a problem for tenants in Germany, especially in the bigger cities.

And in 2015, the Federal Government introduced measures to mitigate the problem. The introduction of the ‚rent price brake‘ is still going on.

Growing anxiety from tenants

More tenants than ever are being asked for higher running costs, modernization costs and annual rent increases. Moving properties is not at option for most, because it is even increasing on new rental contracts.

The problem has reached that heights.

What is the ‚rent price brake‘?

The Rental Price Breaker designed to put a stop to landlords in their areas by more than 10% of the local average. It is uncontrollably and causing a strained market.

Landlords remain exempt from the law in certain circumstances. An example of this has been extensive renovation or modernization. Or, if previous tenants paid more than the local average, then new tenants will too. Other exemptions include tenants in newly built properties.

Tightening the measures

Despite the rent brake, rents are still rising throughout the country. In 2017, the average rent in Germany increased by more than 4%, according to Bundesbank. In some cases, the increase is more than 9%.

Landlords are ready to go ever-increasing because there is a massive shortage of affordable living spaces in Germany. Research thus shows that the rent price has not stopped increasing in rents as much landlords just ignore it. A lit of meaningful penalties for not complying has led to many landlords dismissing the legalization and increasing their rent anyway.

Changes to the legislation

The Federal Government is looking for a way to pay for it are legally obliged to write to the tenant and inform them.

This letter should also be considered as complete. If the landlord fails to do so, the tenant is not legally required to pay the higher amount of rent.

Will the measures affect the whole country?

The rent price brake will continue to operate only in competitive areas of Germany. Other areas, mostly located away from cities, have stayed lower and so it was not considered necessary. Certain political groups are demanding the brake everywhere, in the interests of fairness.

So far, the scheme has been introduced in 313 of the country’s 11,000 cities and towns. This includes cities like Frankfurt, Munich and Berlin, but also smaller cities such as Jena and Brunswick. It has thus been introduced in wealthy rural areas where property is also in very high demand, including Sylt and Emmendingen.

Capping costs of modernization

Fines wants to be introduced to landlords who try and push tenants out under the guise of modernization. Justice Minister Katarina Barley says: „Modernizing for profit is wrong. In the future, tenants will want to claim for damages if landlords drive them back then lease them back to them at a higher price. „

Landlords who do this risk as well as high as € 100,000. Rent can only be increased by 3 Euros per sq. Meter every six years, and in areas with a competitive market, only 8% of the modernization costs can be charged to the tenant.

The changes will start from 1 January 2019, should the measures pass through parliament. And while the rent price is still controversial, the federal government emphasizes the need for the laws to be extended. The current regulations will expire in 2020, which could be disastrous for tenants already struggling with costs.