In mid-June, Berlin launched an initiative to tighten Germany’s rent control legislation, the so-called Mietpreisbremse, and submitted its proposals to Germany’s Federal Council, the Bundesrat.
Berlin’s claim: According to the city state’s mayor, Michael Muller (SPD), rent control in its current form isn’t working as planned and therefore needs to be reformed. Although tenants already have the right to take legal action against landlords who breach rent control limits, very few have so far actually exercised this right. Germany’s Tenants’ Union has also complained that the Mietpreisbremse has not fulfilled its intended purpose, pointing to the fact that actual rental prices in many localities are well above legally permitted levels, as specified by regional rent indexes and local comparative rents. When re-letting apartments, very few landlords seem to be abiding by the “local comparable rent plus 10%” formula permitted under rent control regulations.
The Tenants’ Union has called for stricter sanctions against landlords who ignore the rules. As a result, those who support the reform efforts are also calling for amendments to Germany’s commercial (“white collar”) criminal law. If Berlin’s proposals are approved, landlords will have to explain to tenants, at the beginning of a new tenancy, exactly how their rent has been determined. These disclosures will include details of the previous tenant’s rent, which should allow the new tenant to quickly determine whether any rent increase is within the 10% limit allowed by rent control legislation. In order to increase the accuracy of regional rent indexes, Berlin has also suggested that rental price data from the last six years be included in indexes, rather than just the last four years, as is currently the case. In addition, reformers want landlords to be restricted to upping rents by a maximum of 20% in any four-year period. Current legislation allows rents to be increased by 20% over a three-year period. The Federal Ministry of Justice has welcomed the proposals, viewing them as a good starting point for further discussions. The draft second amendment to Germany’s tenancy law has been submitted to the Federal Council, but no vote has yet been held.
This information comes directly from Berlin Residential Investment Market August 2016 published by Dr. ZitelmannPB. GmbH, Germany's leading consultancy company for the positioning and communication of real estate and fund companies, and the investment brokerage company MICHAEL SCHICK IMMOBILIEN GmbH & CO KG.