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Germany’s ruling Social Democrats are set to propose three years of nationwide rent relief as tenants grapple with soaring housing costs in Europe’s largest economy.
“We need to create breathing space – we need to freeze rents for the next three years,” senior Social Democrat MP Verena Hubertz told Bild am Sonntag, adding that Chancellor Olaf Shaw President Olaf Scholz will outline on Monday measures to tackle the country’s cost of living crisis.
The Social Democratic Party of Germany is the most powerful group in Germany’s three-party coalition government.
Rent increases have hit record highs across Germany this year, where housing costs have historically been stable and families can live in rental housing for life. Just under 60 percent of Germany’s 41 million households live in rental housing, according to the German Federal Statistical Office.
Germans also face rising prices for other goods. Headline consumer price inflation was 6.2% in the year to July, compared with a euro zone average of 5.3%.
Current rules aim to cap property market rent increases of 20 per cent over three years, or 15 per cent in areas designated as particularly tight property markets. Germany’s coalition government has agreed to lower that cap to 11% – something the SPD now says is not enough.
According to a proposal seen by dpa, the party’s plan is to allow rent increases of up to 6 percent in cities with very high demand, while others impose a blanket freeze. nation.
Berlin and Leipzig are among the cities where rents have risen sharply. A survey by real estate portal Immowelt found that rents in mid-tier cities have also risen sharply. In Dormagen in North Rhine-Westphalia, average rents rose by 18 percent last year.
The plan also proposes tougher penalties for landlords who break the rules and charge tenants illegally high rents.
Germany’s real estate market was already facing supply shortages even before the Ukraine war. Food and energy inflation have since soared, while the arrival of nearly a million Ukrainian refugees has put more pressure on existing housing stock.
In addition to rising rents, there are growing concerns about a looming housing shortage, especially in affordable apartments. As interest rates rise, it becomes more expensive to build housing, and a recent study in Germany found a shortfall of 700,000 apartments by 2023.
A rift has already opened up between the SPD and its coalition partner, the Free Democrats. The Liberal Democrats have said in the past that rising rents are largely down to a housing shortage – a problem it wants to address by opening up the housing market, rather than introducing more regulation.
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