The article discusses Germany's 'Rent Brake' law, which limits how much landlords can increase rents in areas with tight housing markets, and notes its recent approval by the Federal Constitutional Court.
The 'Rent Brake' is a regulatory measure introduced in Germany in 2015 to control rent increases in areas identified as having a 'tense housing market.' This law allows landlords to only increase rents by a maximum of ten percent above the local comparative rent for new lease agreements. While some states like Schleswig-Holstein, Saxony-Anhalt, and Saarland do not apply the Rent Brake, it is active in 627 cities and municipalities across the country, effectively curbing rapid rent hikes in those areas.
The implementation of the Rent Brake aims to provide stability for renters by ensuring rents do not rise uncontrollably in high-demand regions. Local municipalities compute the 'comparison rent,' which serves as a benchmark for landlords and helps prevent exorbitant charges. While the Rent Brake does not eliminate rent increases entirely, it ensures they happen at a more reasonable pace, thus maintaining affordability in housing markets susceptible to excessive inflation.
Furthermore, the recent reaffirmation by the Federal Constitutional Court signifies the law's constitutional standing and reinforces the government's commitment to protecting tenants. It is crucial to distinguish the Rent Brake from Berlin's previous 'rent cap' initiative, which faced legal challenges and was eventually overturned. As the approach to housing policy evolves, the effectiveness of the Rent Brake in combating rental inflation remains a critical issue for policymakers and residents alike.
