Plan to limit rent increases in Germany

In Germany, the ruling Social Democratic Party (SPD) is preparing to propose a three-year limit on rent increases across the country.

“We have to create a space to breathe,” SPD deputy Verena Hubertz told the German newspaper Bild Sonntag. “It is necessary to freeze rents for the next three years.” Hubertz added that Prime Minister Olaf Scholz will announce today the measures that will be taken to combat the cost of living crisis in the country.

RENT INCREASES WILL BE FROZEN

Current rules intended to regulate the housing market limit rent increases to between 15 and 20 percent over three years. Germany’s coalition government had agreed to lower this limit to 11 percent. However, the SPD pointed out that this was not enough.

According to a proposal seen by the Deutsche Presse-Agentur news agency, the ruling party plans to allow rents to rise by up to 6 percent in cities where demand is very high and freeze prices in the rest of the country.

APPROXIMATELY 60 PERCENT LEASE

House prices have remained stable in Germany in recent years. However, rents in the country have risen to a record level this year. According to the German Federal Statistical Office, 60 percent of the 41 million households in Germany live in rented houses.

Germans also face high prices on other products. In the country where consumer price growth was 6.2 percent in the first seven months of the year, inflation is also above the euro area average.

THE RAPID RISE IN LEIPZIG AND BERLIN

Berlin and Leipzig, the country’s main cities, are among the regions where rents are rising rapidly.

A survey by the real estate portal Immowelt revealed that rents in medium-sized cities have also increased considerably. In Dormagen, in North Rhine-Westphalia, for example, average rents increased last year by 18 percent.

The German real estate market was already undersupplied even before the Ukrainian war. Food and energy inflation have skyrocketed since then, and the arrival of almost a million Ukrainian refugees put further pressure on the existing housing stock.

OBJECTION BY THE COALITION PARTNER

On the other hand, there is already a gap between the SPD and its coalition partner, the liberal Free Democratic Party (FDP). The FDP claimed that the increase in rents was mainly due to a lack of housing and that it wanted to solve this problem by liberalizing the property markets instead of introducing more regulations.

Daniel Föst, FDP spokesman for construction and housing, said the government should focus on “addressing the construction crisis before the construction sector collapses.” “Only when we build more, faster and cheaper, can we create enough affordable housing,” Föst added.