Rents in Germany Are Rising Again: How Landlords Bypass Rental Caps
Despite government efforts to regulate soaring rents, loopholes and exceptions allow many landlords in Germany to skirt rental cap rules and keep prices high.
In recent years, Germany has seen a steady increase in rental prices as a result of limited housing supply. To address this issue, a ‘rent cap’ policy was introduced in 2015, limiting the rent for new leases in designated areas to no more than 10 percent above the local average. Although the government has deemed the program beneficial and extended it through 2029, it’s only in effect in 492 cities and towns and hasn’t fully curbed rent hikes as some landlords find ways around it.
Landlords commonly exploit exceptions within the current law. For instance, rents can legally be set based on the higher rate paid by a previous tenant, or if the property has been modernized, or if a newly built home was rented out for the first time after October 1, 2014. These loopholes mean the cap doesn’t apply universally. Additionally, the market has seen a sharp rise in furnished apartment rentals. Because there is no legal guideline on how much can be charged for furniture, landlords often tack on a monthly surcharge equivalent to about two percent of the furniture’s value, often without transparency in leasing contracts, leaving tenants vulnerable to unfair charges.
Experts and tenant advocates argue that these exceptions and a lack of strict oversight undermine the effectiveness of the rent cap, especially in major cities. High-priced furnished rentals artificially inflate average rent calculations, pushing prices even higher in many areas. While tenant rights groups and several states are calling for clearer regulation of extra charges for furnished units, lawmakers have yet to implement new policies.
