Germany's Rent Price Brake Extension Proposal

The German government is considering extending the rent price brake until 2029, aiming to address housing market tensions. The brake currently applies in 13 out of 16 states but excludes new buildings post-October 2014 and is limited to areas with strained housing markets determined by state governments. Justice Minister Volker Wissing has proposed a draft extending its application to properties first rented from 2019 onwards.

The proposal has garnered support from various associations, including the German Tenants' Association, the Association of German Cities, and the German Trade Union Confederation. They argue that the extension is necessary to prevent rent hikes that could displace low to middle-income residents from their neighborhoods. However, political hurdles remain, especially in the Bundestag, following the coalition breakdown.

Several federal states, such as Mecklenburg-Vorpommern, Niedersachsen, and Hamburg, are also pushing for the extension. They emphasize the rent price brake's importance, particularly in urban and tourist-heavy areas, where the housing market remains tight. These states intend to propose a legislative initiative in the Bundesrat, as the federal cabinet's plan may not secure a parliamentary majority.

Without an extension, the current regulation is set to expire in 2025, potentially leading to increased rents upon contract renewal. This scenario has raised concerns among both tenants and some landlords, who view the brake as essential for maintaining market stability. As the debate continues, the proposed extension reflects a broader effort to protect tenants in a challenging economic landscape.