Resolution in the German Bundestag: Rental Brake Is Getting Tightened

Only partially did the three-year-old resolution manage to relax the housing market. Now, landlords need to adjust on stricter regulations.

Through a new resolution, politicians try to inhibit price increases. Image: Thomas Koehler/photothek/Deutscher Bundestag

Last Thursday, German Bundestag decided to proceed further against rising rental prices. Through a new bill, landlords will receive more restrictions in regards to rent increases in the future, while at the same time being obligated to more transparency. Governmental parties Union and SPD received this bill instantly well. While AfD and FDP voted against it, Linke and Grüne contained their votes.

Part of this resolution contains an extended disclosure obligation for landlords. They will have to disclose the costs of previous tenants – which will make significant cost increases faster recognizable. Increasing rental costs itself will face further restrictions as well. If high modernisation costs push tenants out of their flat, a fine of up to 100,000 euro can be charged. Additionally, tenants will be able to sue the landlord for compensation.

In conjunction with modernisation measures, rents are generally allowed to be raised by three euro per square meter at most within six years. In the case of already high-priced rents with up to seven euro per square meter, prices can be raised by only two euro. Nationwide, only eight instead of originally eleven percent of future modernisation costs can be stacked upon the rent, regardless of the housing market’s conditions.

The so-called rental brake has been introduced in 2015. Initially only considered for areas with tense housing markets, it limited the increase for new lettings to ten percent over the common local rental price at most. Since this regulation didn’t apply to new constructions or complex modernisations, landlords were able to push prices through “luxury renovations”. Due to grandfathering, high prices could be retained when the previous tenant paid them as well: Without a disclosure obligation, that was yet another way to increase the rent.

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