Federal Minister of Justice presents a draft bill for breaking rise in rents.

New law is to come in 2015.

by Peter Guthmann Published on:

The German Federal Ministry of Justice has presented the expected draft bill for the protection of tenants. The key point is the introduction of the so called “Mietpreisbremse”, meaning breaking the rise in rents by regulating the conditions for reletting apartments in housing markets with a tense situation of supply and demand. Accordingly, rents should be capped in the future - as expected - at 10% above the typical local rent. This regulation will not apply for first letting of real estate in new buildings as well as for comprehensively refurbished apartments. This is to avoid a slowdown of the housing construction caused by these measures. Capping the rents should be introduced only on a regional basis, solely in strained market situations and with a limited duration of 5 years.