Germany Movesโ to Curb Rent Increases with Draft Index-Linked Law
Berlin, November 14, 2024 โค – German Justice Minister Marco Buschmann today unveiled a draft law designedโ to โขregulate โrentโ increases through โthe implementation of index-linked rents, โa move intended to provide โgreater โstability โfor tenants while acknowledging landlord costs. The โฃproposed legislation, announced in Berlin, seeks toโ replace theโ previously invalidated rent control mechanism known as “Mietendeckel” with a system tied to changes in the official construction cost index.
Theโค initiative arrives โฃamid a severe housing shortageโฃ across Germany,particularly in major cities like Munich,Hamburg,and โBerlin,where rising rents areโ placing notable financial strainโ on households. Theโ previous rent control law, implemented in Berlin in 2020, wasโข struck down byโค the โฃFederal Constitutional Court in Aprilโฃ 2021,โ leaving a legalโค void โand exacerbating concerns about affordability. This new draftโฃ aims to โoffer a legally sound โคframework for โmanaging โฃrent adjustments, impacting millions of renters nationwide and possibly influencing future housing policy debates.
The core of the draft law centers on linkingโ rent increases to the officially โpublished construction cost index. This index reflects the โcosts associated with building materials and labor, providing โa benchmark for adjustingโ rents to account for modernization and upkeep โฃexpenses. While โขspecific โฃdetails are still under review, theโข proposed system intends to allow โlandlords to increase rents in lineโ with โthe index, but with limitations to prevent excessive or speculative โincreases.
buschmann emphasized the โneedโ for a balanced approach, stating thatโฃ the law โฃmust protect tenants from unreasonable rentโ hikes while also ensuring landlords haveโ the โขfinancial means to maintain and improve their properties.โ The draft law is now subject to reviewโ by other ministries and is expected to โbeโข debated โขin theโ Bundestagโ in the coming weeks. If passed, โthe index-linkedโข rent system couldโ come into effect as early as 2025, offering a new path โforward in Germany’s โฃongoing struggle โwith housing affordability.