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German cities plan tighter rent laws

Following federal action, several states look at imposing restrictions on what tenants pay

PUBLISHED : Wednesday, 24 April, 2013, 12:00am
UPDATED : Wednesday, 24 April, 2013, 5:20am

Germany's largest cities are preparing to tighten rent regulations as they take advantage of a federal law aimed at curbing the housing boom.

State governments that oversee housing rules in Hamburg, Berlin, Munich and other cities planned to make it illegal to raise rents by more than 15 per cent in three years, according to government officials.

"Rents in Hamburg are quite high and we are discussing different options to regulate them," said Kerstin Graupner, a spokeswoman for Hamburg's urban development agency. "We expect to apply the new law in some form."

Rents in Germany's largest cities have soared as home construction has failed to keep pace with an influx of people. On average, German rents rose 15 per cent in the past five years, according to data compiled by online broker Immobilien Scout.

In December, the German parliament passed a law allowing state governments to cap rent increases in certain areas at 15 per cent every three years, compared with 20 per cent previously. The law comes into effect next month.

On Wednesday, the Bavarian government became the first to adopt the law, a decision that will come into effect on May 15.

In the states of Hamburg, Berlin and North Rhine- Westphalia, legislators are preparing to vote on whether to follow suit.

"We have commissioned an evaluation to find out which cities have a home shortage," said Maik Grimmeck, a spokesman for North Rhine-Westphalia's Ministry for Construction, Housing and Urban Development. "Once we have that, we can put together a regulation."

The law probably would take effect in 2014, he said.

In Hamburg, Berlin and the state of Rhineland-Palatinate, the law was likely to take effect this year, according to officials in those states.

All four states are ruled by the Social Democratic Party. Bavaria is ruled by the Christian Social Union, the sister party of Chancellor Angela Merkel's Christian Democratic Union.