Germany Moves to Curb Rent Increases with Draft Index-Linked Law
Berlin, November 14, 2024 – German Justice Minister Marco Buschmann today unveiled a draft law designed to regulate rent increases through the implementation of index-linked rents, a move intended to provide greater stability for tenants while acknowledging landlord costs. The proposed legislation, announced in Berlin, seeks to replace the previously invalidated rent control mechanism known as “Mietendeckel” with a system tied to changes in the official construction cost index.
The initiative arrives amid a severe housing shortage across Germany,particularly in major cities like Munich,Hamburg,and Berlin,where rising rents are placing notable financial strain on households. The previous rent control law, implemented in Berlin in 2020, was struck down by the Federal Constitutional Court in April 2021, leaving a legal void and exacerbating concerns about affordability. This new draft aims to offer a legally sound framework for managing rent adjustments, impacting millions of renters nationwide and possibly influencing future housing policy debates.
The core of the draft law centers on linking rent increases to the officially published construction cost index. This index reflects the costs associated with building materials and labor, providing a benchmark for adjusting rents to account for modernization and upkeep expenses. While specific details are still under review, the proposed system intends to allow landlords to increase rents in line with the index, but with limitations to prevent excessive or speculative increases.
buschmann emphasized the need for a balanced approach, stating that the law must protect tenants from unreasonable rent hikes while also ensuring landlords have the financial means to maintain and improve their properties. The draft law is now subject to review by other ministries and is expected to be debated in the Bundestag in the coming weeks. If passed, the index-linked rent system could come into effect as early as 2025, offering a new path forward in Germany’s ongoing struggle with housing affordability.
