Germany proposes rent control extension to dampen housing costs
: The German government on Wednesday proposed a law to extend rent controls in an effort to make housing more affordable, following through on a key pledge of the new coalition government under
Chancellor Friedrich Merz
.
The measure, which extends the price controls by another four years through 2029, is fiercely opposed by property industry executives.
The rules, first introduced in 2015, cap new rentals in urban centres to 10% above comparable rents in the area.
"Housing must not become a luxury good," Justice Minister Stefanie Hubig said in announcing the law proposal.
It is one of several measures that the new government is planning as it confronts a housing shortage for
Germany
's growing population, spurred in part by immigrants from Ukraine and Syria.
Germany's property sector hit hard times in 2022, as higher interest rates made borrowing costly. That resulted in falling prices, and it tipped some property firms into insolvency.
It has also put a strain on construction, making it hard for Germany to reach a self-imposed goal of building 400,000 apartments a year to alleviate the housing shortage.
Rolf Buch, CEO of Germany's largest landlord Vonovia , called the rent controls counterproductive.
"This extension of the rent brake will deeply unsettle investors and put further obstacles in the way of new construction," the ZIA property industry association said last week.
Data showed last week that the number of apartments completed in 2024 was 251,900, down 14.4% from 2023 and far off the government goal.
Germany needs to construct 320,000 new apartments each year by 2030 to keep up with demand, a study in March showed.
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