Rents in Germany's major cities have seen above-average growth in recent years. In Hamburg, they rose by 40 percent between 2010 and 2022, in Berlin by as much as 65 percent. To counteract this trend, the former German government decided to extend the rent freeze until 2029, but this has yet to be implemented.
The rent freeze was introduced in 13 federal states in 2015 and is intended to ensure that rents do not rise uncontrollably. When a new tenancy agreement is concluded, the rent may not be more than ten percent higher than the local comparative rent. The state government decides where the rent freeze applies. New-build apartments that are rented out for the first time and rental apartments following extensive modernization are exempt. In 2022, 26.2 million people lived in municipalities with rent control - this corresponds to almost a third of the population. According to a recent analysis by the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR), the rent freeze currently applies in 415 municipalities.
The rent freeze was originally limited to ten years and was due to expire this year. Due to the tense situation on the rental market, the old federal government decided to extend it, but was unable to implement it. Tenants' associations are sounding the alarm and fear disadvantages for tenants if the rent freeze expires. Real estate associations, on the other hand, speak of a "breach of the constitution with announcement" if the rent freeze is extended. They see the rent freeze as a brake on housing construction, which could alleviate the housing shortage better than state regulation.
In a landmark ruling (BGH, 18.12.2024, VIII ZR 16/23), the Federal Court of Justice has now decided that the 2020 ordinance of the state of Berlin on the permissible rent level is lawful and does not violate the guarantee of property rights under the German Basic Law. Limiting the rent level for new lettings is a permissible regulation to protect tenants.
Conclusion: Easing the housing market will be a priority task for the new federal government.
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