With effect from June 1, 2015, the federal states were given the option of limiting rent increases for new leases of existing housing to 15%. The reference value is the "local comparative rent" in the rent index for the respective city. New buildings and comprehensively renovated properties are expressly excluded from this. North Rhine-Westphalia has announced the brake for 22 municipalities. (The state has already declared that it does not intend to make use of the option to extend.)
The relevant law was tightened on January 1, 2019, and October 1, 2019: The increase may only amount to 10% of the comparative rent, and in addition, any unlawful rent increase that has already been implemented can be reclaimed.
It is undisputed that, due to a variety of circumstances, there is a shortage of housing in terms of number, size, and location. This is particularly true for locations, price ranges, and cities that are in high demand, such as Berlin. There, mistakes made in the past must also be corrected by buying back housing stock that was recklessly sold off by municipal companies.
To change this, politicians have come up with ideas that initially focus on the pricing of housing. Probably because it's quick, costs nothing, and is effective in terms of publicity... but it doesn't change the actual cause, which is the shortage of properties... there is a shortage of hundreds of thousands of apartments that have not been built because there is no incentive for investors and developers.
Capping rents will not conjure up a single additional apartment – on the contrary, potential builders of the desired housing will seek and find other uses for their capital. If the rental market does not allow for a sensible, i.e., profitable investment, condominiums and single-family homes will be built. This has the added advantage of being able to realize the profit immediately upon sale.
It is easy to see that the actual goal has clearly been missed. Extending the period of validity or expanding to additional cities and regions will not lead to success either.
A scarce product is not made more abundant by limiting its price.
The rent cap additionally announced by the state of Berlin could – according to legal experts – conflict with the law, as the federal government has already regulated the possibilities for rent increases for new leases with corresponding legal provisions. According to experts, individual states cannot additionally regulate the same matter – they lack the regulatory authority to do so.
Rental housing accounts for just 54% of the total housing stock in Germany! In all other European countries, the home ownership rate is much higher. This is where legislators can do meaningful work and create conditions that make it possible for "current – still – tenants" to purchase property.
