Government Extends Rent Control Measures Until 2029

The German government has approved the extension of the rent control measures, known as the Mietpreisbremse, until the end of 2029. This decision was made during a cabinet meeting where a corresponding legislative proposal from the Federal Minister of Justice, Volker Wissing, was passed. This extension is one year longer than the timeframe initially suggested by Wissing's predecessor, Marco Buschmann.

In addition to the extension, the scope of the regulations is set to expand. However, the proposal's passage in the Bundestag remains uncertain due to the current lack of majority support for the red-green coalition government. The Free Democratic Party (FDP) has expressed a fundamental opposition to the regulation, while the Union party intends to delay discussions on the matter until after the upcoming elections in February.

Without this extension, the rent control measures would have expired at the end of 2025. The Mietpreisbremse allows states to limit rent increases for new leases in areas experiencing housing market pressures. Under this regulation, the rent cannot exceed ten percent above the average local rent.

Changes to the exceptions for new constructions are also proposed. Currently, new buildings completed after October 1, 2014, are exempt from these rent controls, as are first-time rentals following extensive renovations. The new proposal seeks to modify these exceptions, limiting them to properties that were first used and rented after October 1, 2019.

Marco Buschmann had previously resisted the implementation of the rent control measures as outlined in the coalition agreement. However, in October, just weeks before his party exited the coalition government, he presented his draft legislation, which included stricter criteria for how states could justify the need for implementing the rent control measures. The current proposal from Wissing removes these additional requirements.

As discussions continue about the future of rent control in Germany, stakeholders from various political parties are weighing the implications of extending these measures. Proponents argue that the regulations are essential for protecting tenants in high-demand areas, while opponents contend that they may hinder investment in the housing market and limit the construction of new homes.

As the political landscape evolves, the final decision on the rent control measures will be crucial for both tenants and landlords as they navigate the complexities of the housing market in Germany.