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How Germany are combatting the rise in rental costs:

Optimus Search10 January 2020

Optimus Search

2020 Changes to Renting in Germany: What You Should Know

Rising rental prices are quickly becoming a major concern to many living in or planning to move to Germany. But there are some big changes on the horizon in 2020 aimed at easing this growing problem.

The cost of housing in Germany, like in many other European countries is currently under the microscope as renters get to grips with rising house prices and a lack of affordable/new build homes.

So is there likely to be any relief in 2020? 

In short, the answer is yes - From tighter rent controls to housing benefit boosts, there are a series of important changes and developments that you should know about.


Rent brake being tightened and extended

The so-called Mietpreisbremse or ‘rental price brake' was originally designed to prevent landlords in regions with strained housing markets from raising rents by more than 10 per cent than the ‘local benchmark average’ to any new tenants.

In June 2015, Berlin became the first German state to implement the regulation, which has since gone on to include over 300 cities throughout Germany. There are, however, circumstances when a landlord is exempt from the new legislation, such as in the case of new tenants moving in after extensive modernisation or where existing tenants are already paying more than the base average.

However, in 2020 the law is being increasingly tightened, and in future, tenants who are paying over the odds can claim back any overpaid rent retroactively, up to a period of 30 months. The prerequisite is that the tenant flags the discrepancy within this period after the start of the rental contract.

In fact, the rent brake, or the ability for the federal states to impose one, is meant to expire at the end of 2020. However, the regulation has been extended until the end of 2025.


Berlin rent cap

A recent news article highlighted the growing problem when 1,749 flat-hunters queued outside to visit a 

recently vacated, reasonably priced apartment in Berlin a mere 12 hours after it was publicly advertised online, a clear sign of the city's growing troubling housing situation.

But could that all be about to change? Well, city bosses hope so.

The controversial ‘rent-cap” (Mietendeckel), due to be approved in the next few months, is set to implement a five-year rent freeze in the capital.

This means that approximately 1.5 million homes will have their rents frozen and capped at €9.80 for Kaltmiete (cold rent, or costs before utilities) per square meter.

The provisional draft law states that landlords will no longer be able to charge rents higher than what the previous tenant paid and, if their rent is above the limit set out in a rent table (dependant on the age of the building and other specific factors, tenants can now apply to have it lowered.

Exceptions to this rule include social housing, owner-occupied flats, university halls of residence and properties built after January 2014.

After the law gets passed it will then be applied retroactively from June 18th, 2019, meaning that any recent rental increases may not be deemed as valid.
 

Crackdown on excessively high rents

There are also additional plans being put forward from German states to stop tenants facing extremely high rental costs.

Responding to drafts submitted by the states of Bavaria and Schleswig-Holstein, the Bundesrat has put together bills aimed at tightening the legal recourse against landlords and increasing the fines for those caught exploiting tenants.

These measures are to be presented to the Bundestag in 2020 for debate.
 

New restrictions on converting rented apartments to private flats

An additional draft law for the preservation of affordable rental housing is also being put forward by the city-states of Hamburg, Bremen and Berlin.

They want to abolish a loophole in the Planning and Building Law, which says the conversion of rented apartments into private homes is only possible if the apartments are sold to tenants during the first seven years of them living there.

In practice, however, the applicant states argue, tenants are not able to afford to buy the apartments during those seven years. Therefore, the owners allow the period for tenants to buy the home to expire, and then they will be able to offer the home on the market.

That means that new owners then often take back the flat, declaring their own interests (Eigenbedarf) or increase rents after modernization. The bill was presented in the Bundesrat and will be discussed in the relevant committees.
 

Boost to housing benefit

People on low incomes have received an increase in housing benefit (Wohngeld), a state subsidy intended to ensure tenants can afford suitable housing.

From January 1st, housing benefits increased by an average of about 30 per cent. A two-person household, for example, now receives €190 per month instead of the previous €145.

In addition, as a result of the 2020 housing subsidy reform, around 180,000 more households are entitled to the subsidy than before.

From 2022, the housing allowance will then be regularly adjusted every two years to reflect current rent and income trends.

In 2021, the German government is also planning a further housing benefit increase, which will relieve low-income households of heating costs. They are set to rise as a result of the CO2 price increase under the climate protection programme.

Generally, in order to qualify for housing benefit, you cannot be receiving any other benefit payments, such as unemployment allowance.
 

Good-to-know for renters

When you're searching for a flat in Germany, you might find that landlords want to see a Schufa credit check – even during the apartment viewing. But fear not, it's fairly easy to obtain.